The Devastation Awaiting Residential Mortgage-Backed Securities
|
|
- Mark Ball
- 5 years ago
- Views:
Transcription
1 The Devastation Awaiting Residential Mortgage-Backed Securities February 17, 2015 by Keith Jurow Real estate investment euphoria is widespread. An asset class for which Wall Street has provided little useful information residential mortgage-backed securities (RMBS) is especially vulnerable if this euphoria is misplaced. Let s look at the history of the RMBS market and the fundamentals behind these securities today. The desperate search for yield As I have discussed in numerous articles (see here, for example), high-net-worth investors as well as institutions have been in a desperate search for yield. The Federal Reserve has driven down interest rates to levels that have made it impossible to obtain acceptable rates of return for traditional fixed income investments. Because of the Fed s QE policy, investors are compelled to purchase riskier investments hoping that they will provide higher rates of return. Many have plunged into RMBS. Non-agency mortgage-backed securities Non-agency RMBS are securitized mortgages that are not guaranteed by Fannie Mae or Freddie Mac or insured by the FHA. By early 2004, the outstanding amount of non-guaranteed RMBS had more than doubled over the previous four years to $644 billion. Then the speculative mania moved into high gear. Subprime lenders were fed increasingly riskier loan applications by 50,000 mortgage brokers who recruited nearly any borrower who could sign his/her name. With Wall Street frantically securitizing these loans and the three large rating agencies (Moody s, S&P and Fitch) giving what later turned out to be highly questionable AAA ratings, underwriting standards deteriorated rapidly by mid By the end of 2006, speculation reached incredible proportions and underwriting standards had completely collapsed. Half-million dollar mortgages with no down payment were commonplace. Most borrowers could get loans even when their total debt-to-income (DTI) ratio exceeded 50% as long as they had not defaulted in the previous two years. Page 1, 2018 Advisor Perspectives, Inc. All rights reserved.
2 From coast to coast, speculation had become the order of the day. Yet few analysts even hinted that this was certain to end in disaster. As the housing insanity headed straight over a cliff, the total amount of outstanding subprime and other unconventional mortgages soared. When mortgage lending finally peaked in July 2007, an incredible $2.31 trillion of non-guaranteed RMBS were outstanding. No one really knew the extent of the mess that was created. Mortgage modifications designed to stop the bleeding Before Lehman Brothers went bankrupt, a growing number of homeowners with non-guaranteed mortgages had already started defaulting. As 2008 unfolded, mortgage servicers were compelled to modify large numbers of mortgages to slow down this avalanche of defaults. Hopes ran high that these modifications might slow the bleeding. Unfortunately, these hopes were dashed. Borrowers began defaulting on their modified mortgages in huge numbers. Amherst Securities Group (ASG) was the leading firm supplying comprehensive data on the mortgage market. They reported that by the end of 2009, 61% of borrowers with modified mortgages had re-defaulted within 12 months of receiving their modification. A January 16 report issued by the highly respected Inside Mortgage Finance stated that subprime loan modifications now totaled 62% of the loan balance of all outstanding sub-prime loans and a whopping 19% of all prime loans. Millions of modifications have done little more than defer an inevitable calamity. The graph below showing the high rate of re-defaults makes this clear. The x-axis displays the number of months since the modification occurred. Page 2, 2018 Advisor Perspectives, Inc. All rights reserved.
3 The re-default rate for the earliest ( ) modifications was extremely high because they were shoveled out to nearly every delinquent borrower. When mortgage servicers became more selective, default rates for later modifications dropped substantially. Yet even the most recent modifications of 2012 and 2013 show re-default rates of 30% or more and have been clearly climbing. Delinquency rates would have been considerably higher over the past several years had these modifications not occurred. Mortgage servicers and the advancement of principal and interest There is one more important factor that investors and their advisors need to consider carefully. Mortgage servicing companies have what are called pooling and servicing agreements (PSAs) in place requiring them to advance both the principal and interest due to the RMBS trustee from delinquent borrowers. Under the PSA, the servicer is entitled to be reimbursed for these up-front out-of-pocket expenses when the property is eventually foreclosed. Advancing these payments is a major expense for the servicer. It is also very risky because there is no guarantee that the proceeds of the foreclosure sale will be sufficient to reimburse them for all the funds spent. So the PSAs have a very important escape provision. It enables the servicer to avoid advancing these payments if it determines that it is unlikely it will be fully reimbursed at the time of foreclosure. The servicer has ample discretion to make that determination. Page 3, 2018 Advisor Perspectives, Inc. All rights reserved.
4 To what extent have servicers been using this escape clause to avoid making the principal and interest advances? Take a look at this graph from TCW. This graph is shocking. More than 41% of all seriously delinquent sub-prime mortgages did not have the principal and interest advanced by servicers in December Although the rate is much lower for prime mortgages, that percentage has been increasing steadily for the last four years, and the rate of increase has climbed sharply over the past year. Wall Street analysts hardly ever mention this growing problem when discussing the risks or benefits of investing in the RMBS space. But it is a crucial consideration for investment advisors and their clients. Downgrades of non-agency RMBS by Standard & Poor s It is fairly well known that after the sub-prime collapse began in 2007, most sub-prime RMBS tranches rated by S&P were either seriously downgraded from AAA rating or had their rating withdrawn. What most investment advisors do not know is that S&P has continued to underestimate the expected default rates on sub-prime RMBS. In August 2012, S&P reported why it was revising its default projections for mortgages collateralizing non-agency RMBS. This is how they explained the change. Page 4, 2018 Advisor Perspectives, Inc. All rights reserved.
5 We have increased our roll rate assumptions for loans that are currently delinquent (meaning we expect more of these loans to ultimately default). We are also raising default rate estimates for reperforming loans vis à vis current loans. S&P was forced to admit that its previous assumptions on default rates for non-agency RMBS tranches were much too optimistic. This applied to both delinquent loans and modified loans that had become current. S&P explained that its new default estimates applied to roughly 80% of all the outstanding RMBS that they rate. This included subprime, alt-a, negative amortization and prime mortgages originated before How did it reach these revised estimates? S&P had performed an impact study covering about 10% of all the tranches to which its new estimates would apply. The results of this study indicated that for the sampled tranches, approximately 30% of ratings will be lowered by four or more notches. Toward the end of its explanation, S&P gave specific percentages for what it called the base case default frequency assumptions. It stated unequivocally that for any mortgages in non-agency tranches that were 90 or more days delinquent, it expected that 100% of them would end up in default. Not some of them; all of them. Although S&P was clearly warning investors that thousands of downgrades were expected, Wall Street and the media gave the August 2012 announcement little attention at all. I found it by accident while doing research on non-agency RMBS. I have still not uncovered a single article or report covering it. A month after this dire warning, S&P lowered the ratings of dozens of sub-prime RMBS that had been issued between 2005 and No one seemed to care. Downgrades of RMBS continue without letup Although downgrades of sub-prime tranches have been massive since the collapse, it would be wrong to think that these downgrades are winding down. In April 2013, S&P published a new US RMBS Recovery Analytics report. Applying its new rating criteria from the previous year, the report revealed that of the 7,111 pre-2009 tranches still rated AAA in 2012, a mere 1,119 remained at this level. Here is a table from that report. Page 5, 2018 Advisor Perspectives, Inc. All rights reserved.
6 Nearly 85% of the tranches still rated AAA in 2012 had been downgraded by One out of five was downgraded to BBB or lower. Incredibly, more than 10% of them were such junk that they lost their credit rating completely. Downgrades by rating agencies resumed in Last May, Moody s reported that it had downgraded $216 million of RMBS tranches holding sub-prime mortgages originated in All eleven tranches had previously been downgraded either in 2011 or A Moody s press release described the reason for the new downgrade as a result of deteriorating performance and/or structural features resulting in higher expected losses for the bonds than previously anticipated. That sounds very similar to S&P s warning from August This downgrade of sub-prime tranches is a warning to RMBS investors. Loans issued in 2003 even subprime mortgages had much higher underwriting standards than those originated in 2005 and If performance of 2003 loans is deteriorating as Moody s puts it, what does that indicate about the worst mortgages originated in 2006 and early 2007? Putting S & P rating downgrades in perspective Since the vast majority of formerly top-rated RMBS tranches have either been seriously downgraded or Page 6, 2018 Advisor Perspectives, Inc. All rights reserved.
7 have lost their credit rating entirely, how much credibility should be given to their current credit rating? As I see it, not much at all. The fact that so many have continued to be downgraded well after the credit crisis allegedly ended supports my skepticism. The soundness of current credit ratings should not be trusted. How does all this impact a non-agency RMBS investor? If you are the investment advisor for a client who owns these tranches either through shares of a total-return bond fund, a mortgage REIT or a hedge fund, what prudent advice should you give about the risks they pose to return of capital? The coming mortgage delinquency fiasco Much nonsense has been written about the so-called housing recovery. For several years, I have provided in-depth compelling evidence that this recovery is nothing more than an illusion. On January 26, the Washington Post published a lengthy article depicting the plight of an underwater homeowner couple in Prince George s County, a suburb of Washington, D.C. The couple began their journey by purchasing a three-bedroom townhouse in 2000 for $128,000. Because their property had nearly tripled in value in the red-hot D.C. suburbs market, they decided to build a larger home for their growing family in 2005 for $600,000. To pay for the house, they took out a $493,000 interest-only first mortgage and used a cash-out refinancing on their townhouse for the down payment. Monthly payments on the two mortgages amounted to $5,500. A year later, the couple decided to refinance the mortgage on their new home and consolidate other personal debt. They took out a $620,000 first mortgage from the infamous sub-prime lender Countrywide Home Loans. It was also an interest-only mortgage whose rate would rise in two years. Unfortunately, this was the peak of the housing bubble and prices began to crumble. They tried to hang on as long as possible. However, they realized that they could not cover the higher mortgage payment when it reset to a higher rate. Because the property was underwater, they also could not refinance. So they stopped making their mortgage payments in the fall of In mid-2010, the couple received a first notification that their mortgage servicer intended to foreclose on their home. They had not made a payment for 20 months. They applied several times for a modification of their mortgage but were turned down. In the spring of 2011, they were rejected for a modification under HUD s HAMP program. In the summer of 2011, the couple was sent an unsolicited short sale agreement by their mortgage servicer explaining the terms of a short sale that would require them to sell the home at a substantial loss. Fast forward to Bank of America sold the mortgage servicing rights to Nationstar. The new servicer informed the couple that their delinquent payments totaling $318,000 were now due. A spokesman for Nationstar informed the author of the Washington Post article that a foreclosure had Page 7, 2018 Advisor Perspectives, Inc. All rights reserved.
8 not been scheduled. Nationstar called the couple in January of this year to find ways to work things out. Work things out? What insanity! If you add the couple s personal debts to the mortgage debt on their two properties, the total is $1.3 million. Their house had a market value that was little more than onethird the outstanding mortgage debt on it. Despite the fact that this couple had not made a mortgage payment in more than six years, the servicer was not ready to foreclose on their home. Throughout the country, there are millionsof homeowners who are now in similar situations. Servicing banks are not putting the vast majority of them into foreclosure. Most remain in their house without making mortgage payments. Many others have either abandoned the property or moved out and rented it. Let s not forget the massive numbers of homeowners who have received a mortgage modification and re-defaulted. That number increases every day. If your client owns a piece of a non-agency RMBS tranche not guaranteed by the GSEs, there are substantial numbers of these delinquent and underwater mortgages which are the collateral behind their bond. They need to understand that sooner or later, these loans will be liquidated. For several years now, far too much attention has been placed on interest-rate risk and too little on credit risk. It is incumbent upon advisors to review whether the default and non-payment assumptions which they use to determine the appropriate price for non-agency RMBS bonds are sufficiently realistic to withstand the turmoil that awaits the mortgage and housing markets. If not, clients who own non-agency RMBS bonds should sell them before the housing market worsens. If your client is considering buying one of these RMBS bonds, apprise them of the serious risks before they step over the cliff. Keith Jurow is a real estate analyst and former author of Minyanville s Housing Market Report. His new report Capital Preservation Real Estate Report launched a little more than a year ago. Page 8, 2018 Advisor Perspectives, Inc. All rights reserved.
Cash-Out Refinancing During Bubble Years Will Lead to Disaster
Cash-Out Refinancing During Bubble Years Will Lead to Disaster February 20, 2017 by Keith Jurow Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent
More informationHearing on The Housing Decline: The Extent of the Problem and Potential Remedies December 13, 2007
Statement of Michael Decker Senior Managing Director, Research and Public Policy Before the Committee on Finance United States Senate Hearing on The Housing Decline: The Extent of the Problem and Potential
More informationWhy the Housing Market Collapse is Set to Resume
Why the Housing Market Collapse is Set to Resume June 2, 2015 by Keith Jurow Analysts continue to be baffled by the weakness of the housing recovery. Mortgage rates have remained exceptionally low for
More informationWaMu CASE STUDY (Executive Summary) (1) High Risk Lending: Case Study of Washington Mutual Bank
WaMu CASE STUDY (Executive Summary) (1) High Risk Lending: Case Study of Washington Mutual Bank The first chapter focuses on how high risk mortgage lending contributed to the financial crisis, using as
More informationb. Financial innovation and/or financial liberalization (the elimination of restrictions on financial markets) can cause financial firms to go on a
Financial Crises This lecture begins by examining the features of a financial crisis. It then describes the causes and consequences of the 2008 financial crisis and the resulting changes in financial regulations.
More informationCredit Crisis: The Sky is not Falling
Credit Crisis: The Sky is not Falling U.S. stock markets are gyrating on news of an apparent credit crunch generated by defaults among subprime home mortgage loans. Such frenzy has spurred Wall Street
More informationA Housing Price Collapse in Queens New York Is Almost Certain
A Global Internet News Network Wednesday, September 1, 2010 Global News Editions A Housing Price Collapse in Queens New York Is Almost Certain Posted by Keith Jurow 06/21/10 8:00 AM EST Many commentators
More informationThe Financial Crisis of 2008 and Subprime Securities. Gerald P. Dwyer Federal Reserve Bank of Atlanta University of Carlos III, Madrid
The Financial Crisis of 2008 and Subprime Securities Gerald P. Dwyer Federal Reserve Bank of Atlanta University of Carlos III, Madrid Paula Tkac Federal Reserve Bank of Atlanta Subprime mortgages are commonly
More information10.2 Recent Shocks to the Macroeconomy Introduction. Housing Prices. Chapter 10 The Great Recession: A First Look
Chapter 10 The Great Recession: A First Look By Charles I. Jones Media Slides Created By Dave Brown Penn State University 10.2 Recent Shocks to the Macroeconomy What shocks to the macroeconomy have caused
More informationReal Estate Loan Losses, Bank Failure and Emerging Regulation 2010
Real Estate Loan Losses, Bank Failure and Emerging Regulation 2010 William C. Handorf, Ph. D. Current Professor of Finance The George Washington University Consultant Banks Central Banks Corporations Director
More informationChapter 14. The Mortgage Markets. Chapter Preview
Chapter 14 The Mortgage Markets Chapter Preview The average price of a U.S. home is well over $208,000. For most of us, home ownership would be impossible without borrowing most of the cost of a home.
More informationReal Estate Loan Losses, Bank Failure and Emerging Regulation 2011
Real Estate Loan Losses, Bank Failure and Emerging Regulation 2011 William C. Handorf, Ph. D. Current Professor of Finance The George Washington University Consultant Banks Central Banks Corporations Director
More informationM E M O R A N D U M Financial Crisis Inquiry Commission
M E M O R A N D U M Financial Crisis Inquiry Commission To: From: Commissioners Ron Borzekowski Wendy Edelberg Date: July 7, 2010 Re: Analysis of housing data As is well known, the rate of serious delinquency
More informationThe Obama Administration s Efforts To Stabilize The Housing Market and Help American Homeowners
The Obama Administration s Efforts To Stabilize The Housing Market and Help American Homeowners May 2011 U.S. Department of Housing and Urban Development Office of Policy Development Research U.S Department
More informationChapter 11 11/18/2014. Mortgages and Mortgage Markets. Thrifts (continued)
Mortgages and Mortgage Markets Chapter 11 Sources of Funds for Residential Mortgages McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. 11-2 Traditional and Modern
More informationTestimony of Keith Johnson. Former President of Clayton Holdings, Inc. and. Former President of Washington Mutual s Long Beach Mortgage
Testimony of Keith Johnson Former President of Clayton Holdings, Inc. and Former President of Washington Mutual s Long Beach Mortgage Before the Financial Crisis Inquiry Commission September 23, 2010 Chairman
More informationA Nation of Renters? Promoting Homeownership Post-Crisis. Roberto G. Quercia Kevin A. Park
A Nation of Renters? Promoting Homeownership Post-Crisis Roberto G. Quercia Kevin A. Park 2 Outline of Presentation Why homeownership? The scale of the foreclosure crisis today (20112Q) Mississippi and
More informationThe Obama Administration s Efforts To Stabilize The Housing Market and Help American Homeowners
The Obama Administration s Efforts To Stabilize The Housing Market and Help American Homeowners April 2012 U.S. Department of Housing and Urban Development Office of Policy Development Research U.S Department
More informationFILED: NEW YORK COUNTY CLERK 12/21/2013 INDEX NO /2013 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 12/21/2013. Exhibit 22
FILED: NEW YORK COUNTY CLERK 12/21/2013 INDEX NO. 653335/2013 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 12/21/2013 Exhibit 22 Page1 1of1DOCUMENT Copyright 2006 Factiva, from Dow Jones All Rights Reserved (Copyright(c)
More informationThe US Housing Market Crisis and Its Aftermath
The US Housing Market Crisis and Its Aftermath Asian Development Bank November 16, 2009 Table of Contents Section I II III IV V US Economy and the Housing Market Freddie Mac Overview Business Activities
More informationThe state of the nation s Housing 2013
The state of the nation s Housing 2013 Fact Sheet PURPOSE The State of the Nation s Housing report has been released annually by Harvard University s Joint Center for Housing Studies since 1988. Now in
More informationMaking Securitization Work for Financial Stability and Economic Growth
Shadow Financial Regulatory Committees of Asia, Australia-New Zealand, Europe, Japan, Latin America, and the United States Making Securitization Work for Financial Stability and Economic Growth Joint Statement
More information1 Anthony B. Sanders, Ph.D. is Professor of Finance at the School of Management at George Mason University
Anthony B. Sanders 1 Oral Testimony House Financial Services Committee March 23, 2010 Hearing on Housing Finance-What Should the New System Be Able to Do? Part I-Government and Stakeholder Perspectives
More informationAfter-tax APRPlus The APRPlus taking into account the effect of income taxes.
MORTGAGE GLOSSARY Adjustable Rate Mortgage Known as an ARM, is a Mortgage that has a fixed rate of interest for only a set period of time, typically one, three or five years. During the initial period
More informationAUDITED FINANCIAL STATEMENTS
AUDITED FINANCIAL STATEMENTS For the years ended June 30, 2010 and 2009 Audited Financial Statements WEST VIRGINIA HOUSING DEVELOPMENT FUND For the Years Ended June 30, 2010 and 2009 Audited Financial
More informationSTUDY GUIDE SHOULD GOVERNMENT BAIL OUT BIG BANKS? KEY TERMS: bankruptcy de-regulation credit bailout depression TARP
STUDY GUIDE SHOULD GOVERNMENT BAIL OUT BIG BANKS? KEY TERMS: bankruptcy de-regulation credit bailout depression TARP NOTE-TAKING COLUMN: Complete this section during the video. Include definitions and
More informationThe Foreclosure Crisis in NYC: Patterns, Origins, and Solutions. Ingrid Gould Ellen
The Foreclosure Crisis in NYC: Patterns, Origins, and Solutions Ingrid Gould Ellen Reasons for Rise in Foreclosures Risky underwriting Over-leveraged borrowers High debt to income ratios Economic downturn
More information1. What was life like in Iceland before the financial crisis? 3. How much did Iceland s three banks borrow? What happened to the money?
E&F/Raffel Inside Job Directed by Charles Ferguson Intro: The Case of Iceland 1. What was life like in Iceland before the financial crisis? 2. What changed in 2000? 3. How much did Iceland s three banks
More informationThe Coming Home Equity Line of Credit Crisis
The Coming Home Equity Line of Credit Crisis March 2, 2016 by Gary Halbert of Halbert Wealth Management IN THIS ISSUE: 1. Will HELOCs Trigger the Next Financial Crisis? 2. Millions of HELOCs to Reset in
More informationLike the Universe, the Short-term Bond Opportunity Continues to Expand
National Association of Local Housing Finance Agencies 2014 Annual Educational Conference Atlanta, Georgia April 2-5, 2015 Like the Universe, the Short-term Bond Opportunity Continues to Expand Presented
More informationGlobal Financial Crisis
Global Financial Crisis Hand in the homework that is due today What caused the Global Financial Crisis? We ll focus today on Financial Innovation and Regulatory Issues Other issues have been cited, including
More informationWHAT THE REALLY HAPPENED...
WHAT THE F#@K REALLY HAPPENED... THE ECONOMIC CRISIS OF 08 EDMOND GRADY A BANKER IS A FELLOW WHO LENDS YOU HIS UMBRELLA WHEN THE SUN IS SHINING, BUT WANTS IT BACK THE MINUTE IT BEGINS TO RAIN. MARK TWAIN
More informationHome Affordable Refinance Program
Home Affordable Refinance Program This paper is about HARP. We will explain what the program is about and how it can help many people get their mortgage payments into an affordable range. About HARP Home
More informationThe Obama Administration s Efforts To Stabilize The Housing Market and Help American Homeowners
The Obama Administration s Efforts To Stabilize The Housing Market and Help American Homeowners November 2012 U.S. Department U.S Department of Housing of Housing and Urban and Urban Development Development
More informationThe Obama Administration s Efforts To Stabilize the Housing Market and Help American Homeowners
The Obama Administration s Efforts To Stabilize the Housing Market and Help American Homeowners February 2015 U.S. Department of Housing and Urban Development Office of Policy Development and Research
More informationThe Great Recession How Bad Is It and What Can We Do?
The Great Recession How Bad Is It and What Can We Do? Helen Roberts Clinical Associate Professor in Economics, Associate Director University of Illinois at Chicago Center for Economic Education Recession
More informationPREPARED REMARKS FOR DAVID H. STEVENS ASSISTANT SECRETARY FOR HOUSING FHA COMMISSIONER U.S
PREPARED REMARKS FOR DAVID H. STEVENS ASSISTANT SECRETARY FOR HOUSING FHA COMMISSIONER U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AT THE THE WORLD BANK 4 TH GLOBAL CONFERENCE ON HOUSING FINANCE IN
More informationThe Obama Administration s Efforts To Stabilize the Housing Market and Help American Homeowners
The Obama Administration s Efforts To Stabilize the Housing Market and Help American Homeowners August 2015 U.S. Department of Housing and Urban Development Office of Policy Development and Research U.S
More informationThe Mortgage Industry
Financing Residential Real Estate Lesson 4: The Mortgage Industry Introduction In this lesson, we will cover: steps in the residential mortgage process; participants in the process, including loan originators
More informationBeryl Credit Pulse on Structured Finance
Beryl Credit Pulse on Structured Finance This paper will summarize Beryl Consulting 2010 outlook and hedge fund portfolio construction for the structured finance sector in light of the events of the past
More informationWeakness in the U.S. Housing Market Likely to Persist in 2008
Weakness in the U.S. Housing Market Likely to Persist in 2008 Commentary by Sondra Albert, Chief Economist AFL-CIO Housing Investment Trust January 29, 2008 The national housing market entered 2008 mired
More informationOctober 11 Rating Actions Related to 2006 Subprime First-Lien RMBS
STRUCTURED FINANCE Special Report October 11 Rating Actions Related to 2006 Subprime First-Lien RMBS AUTHOR: Amy Tobey VP-Senior Analyst (212) 553-7922 Amelia.Tobey@moodys.com CONTACTS: Joseph Rocco Associate
More information11/9/2017. Chapter 11. Mortgages and Mortgage Markets. Traditional and Modern Housing Finance: From S&Ls to Securities. Thrifts (continued)
Mortgages and Mortgage Markets Chapter 11 Sources of Funds for Residential Mortgages McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. 11-2 Traditional and Modern
More informationSUB PRIME CRISIS & EUROZONE CRISIS. Presented by Amitesh Kumar Sinha, Dir. Fin (Accounts)
SUB PRIME CRISIS & EUROZONE CRISIS Presented by Amitesh Kumar Sinha, Dir. Fin (Accounts) Prof Khaled Soufani ESCP/LONDON ESCP London London Business School courtyard in snow Housing Bubble - MORTGAGE LENDING
More informationU.S. Residential. Mortgage Default. Performance Update. & Market Analysis
2016 U.S. U.S. RESIDENTIAL MORTGAGE DEFAULT PERFORMANCE UPDATE & MARKET ANALYSIS The residential mortgage servicing industry is worlds away from where it was six years ago at the peak of the housing crisis,
More informationCapital Market Trends and Forecasts
Capital Market Trends and Forecasts Glenn Yago, Ph.D. Director, Capital Studies Milken Institute Los Angeles Fire and Police Pension System Education Retreat January 7, 28 1 Dow Jones U.S. Financial Index
More informationExhibit 3 with corrections through Memorandum
Exhibit 3 with corrections through 4.21.10 Memorandum High LTV, Subprime and Alt-A Originations Over the Period 1992-2007 and Fannie, Freddie, FHA and VA s Role Edward Pinto Consultant to mortgage-finance
More informationCommunity Banks and Housing Finance Reform
June 29, 2017 Community Banks and Housing Finance Reform On behalf of the more than 5,800 community banks represented by ICBA, we thank Chairman Crapo, Ranking Member Brown, and members of the Senate Banking
More informationOctober 20, Benefits of FRMs
Testimony of Dr. Anthony B. Sanders Before the U.S. Senate Banking Committee Topic: entitled Housing Finance Reform: Continuation of the 30-year Fixed-Rate Mortgage. October 20, 2011 Mr. Chairman, and
More information*Corresponding author: Lawrence J. White, The NYU Stern School of Business.
DOI 10.1515/ev-2013-0002 The Economists Voice 2013; 10(1): 15 19 Viral Acharya, Matthew Richardson, Stijn Van Nieuwerburgh and Lawrence J. White* Guaranteed to Fail: Fannie Mae and Freddie Mac and What
More informationBen S Bernanke: Reducing preventable mortgage foreclosures
Ben S Bernanke: Reducing preventable mortgage foreclosures Speech of Mr Ben S Bernanke, Chairman of the Board of Governors of the US Federal Reserve System, at the Independent Community Bankers of America
More informationA Citizen s Guide to the 2008 Financial Report of the U.S. Government
A citizens guide to the report of the united states government The federal government s financial health OVERVIEW Fiscal Year (FY) 2008 was a year of unprecedented change in the financial position and
More informationThe U.S. Residential Mortgage Market: Sizing the Problem and Proposing Solutions
The U.S. Residential Mortgage Market: Sizing the Problem and Proposing Solutions Laurie S. Goodman Senior Managing Director Amherst Securities Group, LP New York City T The U.S. housing market remains
More informationHomeownership Preservation in Maryland
Maryland Department of Housing and Community Development Homeownership Preservation in Maryland A presentation to the Western Maryland 2008 Small Town Symposium and Rural Roundtable April 23, 2008 Martin
More informationGroup 14 Dallas Hall, Chuck Dobson, Guy Tahye, Tunde Olabiyi
In order to understand how we have gotten to the point where government intervention is needed to save our financial markets, it is necessary to look back and examine the many causes that lead to this
More informationIntroduction... 3 Definitions... 3 Subprime loan... 3 Mortgage loan... 3
Table of Contents Introduction... 3 Definitions... 3 Subprime loan... 3 Mortgage loan... 3 Real estate and subprime lending in the US... 4 Politics... 4 The rise of subprime mortgages... 4 Risks with Subprime
More informationTestimony of Dean Baker. Before the Subcommittee on Housing and Community Opportunity of the House Financial Services Committee
Testimony of Dean Baker Before the Subcommittee on Housing and Community Opportunity of the House Financial Services Committee Hearing on the Recently Announced Revisions to the Home Affordable Modification
More informationALI-ABA Course of Study The Subprime Mortgage Crisis: From A to Z September 18-19, 2008 Washington, D.C. 2007: Looking Back at What's Ahead
67 ALI-ABA Course of Study The Subprime Mortgage Crisis: From A to Z September 18-19, 2008 Washington, D.C. 2007: Looking Back at What's Ahead By Jeffrey S. Nielsen Navigant Consulting, Inc. Washington,
More informationBEYOND THE CREDIT SCORE: The Secondary Mortgage Market
BEYOND THE CREDIT SCORE: The Secondary Mortgage Market Housing Action IL Housing Action Illinois is a statewide coalition formed to protect and expand the availability of quality, affordable housing throughout
More information2008 STOCK MARKET COLLAPSE
2008 STOCK MARKET COLLAPSE Will Pickerign A FINACIAL INSTITUTION PERSECTIVE QUOTE In one way, I m Sympathetic to the institutional reluctance to face the music - Warren Buffet (Fortune 8/16/2007) RECAP
More informationWhy is the Country Facing a Financial Crisis?
Why is the Country Facing a Financial Crisis? Prepared by: Julie L. Stackhouse Senior Vice President Federal Reserve Bank of St. Louis November 3, 2008 The views expressed in this presentation are the
More informationHow the Trump administration can continue progress in U.S. housing
How the Trump administration can continue progress in U.S. housing By Mark Zandi January 5, 2017 While housing has come a long way since the financial crisis, it has yet to fully recover. First-time home
More informationReforming the Selection of Rating Agencies in Securitization Markets: A Modest Proposal
Reforming the Selection of Rating Agencies in Securitization Markets: A Modest Proposal Howard Esaki Lawrence J. White (An edited version will be forthcoming in the Milken Institute Review) Introduction:
More informationA look Behind the numbers Winter Behind the numbers. A Look. Distressed Loans in Ohio:
A look Behind the numbers Winter 2013 Published By The Federal Reserve Bank of Cleveland Behind the numbers A Look written by Lisa Nelson and Francisca G.-C. Richter 9 147 3 Distressed Loans in Ohio: Recent
More informationFannie Mae and Freddie Mac in Conservatorship
Order Code RS22950 September 15, 2008 Fannie Mae and Freddie Mac in Conservatorship Mark Jickling Specialist in Financial Economics Government and Finance Division Summary On September 7, 2008, the Federal
More informationRandall S Kroszner: Legislative proposals on reforming mortgage practices
Randall S Kroszner: Legislative proposals on reforming mortgage practices Testimony by Mr Randall S Kroszner, Member of the Board of Governors of the US Federal Reserve System, before the Committee on
More informationLecture 12: Too Big to Fail and the US Financial Crisis
Lecture 12: Too Big to Fail and the US Financial Crisis October 25, 2016 Prof. Wyatt Brooks Beginning of the Crisis Why did banks want to issue more loans in the mid-2000s? How did they increase the issuance
More information1003 form Commonly used mortgage loan application developed by Fannie Mae. Sometimes called the Uniform Residential Loan Application.
GLOSSARY 1003 form Commonly used mortgage loan application developed by Fannie Mae. Sometimes called the Uniform Residential Loan Application. Acceptance A verbal or written acceptance of an offer to buy
More informationDon t Raise the Federal Debt Ceiling, Torpedo the U.S. Housing Market
Don t Raise the Federal Debt Ceiling, Torpedo the U.S. Housing Market Failure to Act Would Have Serious Consequences for Housing Just as the Market Is Showing Signs of Recovery Christian E. Weller May
More informationExecutive Summary. Joint Center for Housing Studies of Harvard University 1
1 Executive Summary Despite unprecedented federal efforts to jumpstart the economy and help homeowners keep up with their mortgage payments, home prices continued to fall and foreclosures continued to
More informationHARP Refinance Guide. How You can Benefit from the HARP Program
HARP Refinance Guide How You can Benefit from the HARP Program Contents How HARP Can Help You You Might Qualify for HARP but Not Know It HARP Qualification Basics HARP History HARP 1.0 HARP 2.0 HARP 3.0
More informationHousing, Exports, and North Carolina s Economy
Economics Bulletin number 1 august 2008 Housing, Exports, and North Carolina s Economy Karl W. Smith Introduction From 2000 to 2006, the average value of a home in the United States rose by 89 percent.
More informationIntroduction. The NFCC and Foreclosure Mitigation Counseling
Testimony of Susan C. Keating President and CEO, National Foundation for Credit Counseling Before the United States House of Representatives Committee on Financial Services Subcommittee on Housing and
More informationFORECLOSURE PREVENTION PRINCIPAL REDUCTION AND. Preliminary Report, Findings and Recommendations from the IDT. Seattle City Council March 26, 2014
1 PRINCIPAL REDUCTION AND FORECLOSURE PREVENTION Preliminary Report, Findings and Recommendations from the IDT Seattle City Council March 26, 2014 2 IDT Scope of Work Resolution 31495 directed IDT to explore
More informationThe Crash of 2008: Causes and Lessons to Be Learned
Social Education 72(2), pp 63 67 2009 National Council for the Social Studies Special Section The Crash of 2008: Causes and Lessons to Be Learned James D. Gwartney and Joseph Connors The headlines of 2008
More informationOn Financial Crisis and Economic Recovery Plan. delivered 24 September 2008
George W. Bush On Financial Crisis and Economic Recovery Plan delivered 24 September 2008 AUTHENTICITY CERTIFIED: Text version below transcribed directly from audio Good evening. This is an extraordinary
More informationFREDDIE MAC REVIVES CMBS MARKET: CAPITAL MARKETS EXECUTION (CME) REVISITED 1. June 2011
I. INTRODUCTION FREDDIE MAC REVIVES CMBS MARKET: CAPITAL MARKETS EXECUTION (CME) REVISITED 1 June 2011 By Timothy L. Gustin, Esq. Moss & Barnett, A Professional Association In June 2009, Federal Home Loan
More informationThe Causes of the 2008 Financial Crisis
UK Summary The Causes of the 2008 Financial Crisis The text discusses the background history of the financial crash through focusing on prime and sub-prime mortgage lending. It then explores the key reasons
More informationS&P/Case Shiller index
S&P/Case Shiller index Home price index Index Jan. 2000=100, 3 month ending 240 220 200 180 160 10-metro composite 140 120 20-metro composite 100 80 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
More informationIra G. PEPPERCORN. The Tragedy of the Mortgage Commons. President IRA PEPPERCORN INTERNATIONAL, LLC
The Tragedy of the Mortgage g Commons Ira G. PEPPERCORN President IRA PEPPERCORN INTERNATIONAL, LLC WORLD BANK-IFC WORKSHOP ON HOUSING FINANCE IN SOUTH ASIA JAKARTA INDONESIA MAY 28, 2009 U.S. Mortgage
More informationThe Financial Turmoil in 2007 and 2008 Events
The Financial Turmoil in 2007 and 2008 Events Gerald P. Dwyer, Jr. May 2008 Copyright Gerald P. Dwyer, Jr., 2008 Caveats I am speaking for myself, not the Federal Reserve Bank of Atlanta or the Federal
More informationFaith Schwartz Testifies at TARP Foreclosure Mitigation Programs Hearing
October 27, 2010 Media Contact: Brad Dwin (202) 589-1938 brad@hopenow.com Faith Schwartz Testifies at TARP Foreclosure Mitigation Programs Hearing (WASHINGTON, DC) Faith Schwartz, senior adviser, and former
More informationSTEPHEN K. LEECH, CFA
INSIGHT VIEWPOINT Subprime Lending Returns: This Time with Explicit Government Support STEPHEN K. LEECH, CFA 3 JANUARY 2019 One of the great mistakes is to judge policies and programs by their intentions
More informationNational Community Land Trust Network 2008 Foreclosure Survey Report October 26, 2009
National Community Land Trust Network 2008 Foreclosure Survey Report October 26, 2009 By Marge Misak, Cuyahoga Community Land Trust, Cleveland and National CLT Academy Board Member, with support from Roger
More informationCommercial Real Estate: Is Another Crisis Looming?
Commercial Real Estate: Is Another Crisis Looming? Commercial Real Estate Mortgages and Mortgage-Backed Securities Cornerstone Research specializes in assisting attorneys with the complex business issues
More informationThe Financial Crisis. Gerald P. Dwyer Federal Reserve Bank of Atlanta University of Carlos III, Madrid
The Financial Crisis Gerald P. Dwyer Federal Reserve Bank of Atlanta University of Carlos III, Madrid Disclaimer These views are mine and not necessarily those of the Federal Reserve Bank of Atlanta or
More informationGuaranteed to Fail Fannie Mae, Freddie Mac and the Debacle of US Housing Finance
Guaranteed to Fail Fannie Mae, Freddie Mac and the Debacle of US Housing Finance Prof. Stijn Van Nieuwerburgh New York University Stern School of Business March 1, 2011 Published by Princeton University
More informationMORTGAGE MARKETS AND THE ENTERPRISES IN July 2008
MORTGAGE MARKETS AND THE ENTERPRISES IN 2007 July 2008 Preface This Office of Federal Housing Enterprise Oversight (OFHEO) research paper reviews developments in the housing sector and the primary and
More informationJack E. Hopkins President and CEO of CorTrust Bank Sioux Falls, SD
Testimony of Jack E. Hopkins President and CEO of CorTrust Bank Sioux Falls, SD On behalf of the Independent Community Bankers of America Before the United States Senate Committee on Banking, Housing and
More informationHomeownership. The State of the Nation s Housing 2009
Homeownership Entering 9, foreclosures were at a record high, price declines were keeping many would-be buyers on the sidelines, and tighter underwriting standards were preventing many of those ready to
More informationFederal National Mortgage Association
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December
More informationThe Financial Turmoil in 2007 and 2008
The Financial Turmoil in 2007 and 2008 Gerald P. Dwyer June 2008 Copyright Gerald P. Dwyer, Jr., 2008 Caveats I am speaking for myself, not the Federal Reserve Bank of Atlanta or the Federal Reserve System
More informationInvestment Matters: Non- Residential Structures. Introduction. Volume 1 Number 5 May Thanks again for subscribing! By CR
Volume 1 Number 5 May 2008 Introduction Thanks again for subscribing! This month CR is going to shift gears and start with non-residential investment and commercial real estate (CRE). It appears the CRE
More informationManaging Your Money: "Housing and Public Policy the Bubble, Present, and Future
Managing Your Money: "Housing and Public Policy the Bubble, Present, and Future PLATO (Participatory Learning and Teaching Organization) J. Michael Collins UW Madison Center for Financial Security Overview
More informationOrigins of the Financial Market Crisis of 2008 Anna J. Schwartz
Origins of the Financial Market Crisis of 2008 Anna J. Schwartz I begin by describing the factors that contributed to the financial market crisis of 2008. I end by proposing policies that could have prevented
More information10 Years After the Financial Crisis: Where Do Shareholder Rights Stand?
NEW YORK PUERTO RICO / TEXAS / ILLINOIS / 845 THIRD AVENUE NEW YORK, NY 10022 (212) 759-4600 WOLFPOPPER.COM 10 Years After the Financial Crisis: Where Do Shareholder Rights Stand? Chet B. Waldman Wolf
More informationhat are commercial mortgaged-backed securities?
Chapter 1: An Overview of CMBS I. CMBS CREATION Chapter 1: An Overview of CMBS 1.1 General W hat are commercial mortgaged-backed securities? Commercial mortgaged-backed securities (CMBS) are bonds whose
More informationThe Impact of Foreclosures on Economic Recovery in Virginia
The Impact of Foreclosures on Economic Recovery in Virginia February, 2012 Brian Koziol Housing Policy and Research Analyst www.phonehome.org 804.354.0641 Where you live makes all the difference About
More informationPrintable Lesson Materials
Printable Lesson Materials Print these materials as a study guide These printable materials allow you to study away from your computer, which many students find beneficial. These materials consist of two
More informationCHIMERA INVESTMENT CORPORATION DIVIDEND REINVESTMENT PLAN. 25,000,000 Shares of Common Stock
PROSPECTUS CHIMERA INVESTMENT CORPORATION DIVIDEND REINVESTMENT PLAN 25,000,000 Shares of Common Stock The Dividend Reinvestment Plan, or the Plan, is designed to provide current holders of our common
More information