Friday, August 25, 2006

h&r block / mbs / bad loans

nachfolgend ein exemplarisches beispiel wie blauäugig die großen hypothekenfinanzierer die lage am markt eingeschätzt haben. das trifft besonders auf die subprime kreditgeber zu. die operieren traditionell in der höchsten risikokategorie in sachen kreditnehmer. hinzu kommt das damit verbunden oftmal die art der kredite oft von "kreativen" krediten dominiert wir. hier zum beispiel mit einem anteil von 80% variabler kredite und zugleich einem großteil der kreditvergabe in bubblezentren wie californien, florida etc.

gleichzeitig waren die reserven für die als mbs verbriefte kredite in den letzten jahren fast nicht vorhanden. der wertzuwachs der immobilien kaschierte das risiko.

seit dem 2. quartal hat sich das speil gedreht und die lender werden aufgrund von zahlungsausfällen gezwungen ihre mbs zurückzukaufen. die reserven die bisher nicht nötig waren werden explodieren. die auswirkungen auf die bilanzen/ergebnisse dürften wenig erfreulich sein.
http://immobilienblasen.blogspot.com/2006/08/buyback-mbs-geplatzte-mbs.html



H&R Block Expects to Report Provision for Losses Related to Increase in Loan Repurchases
http://biz.yahoo.com/bw/060824/20060824005676.html?.v=1



KANSAS CITY, Mo.--(BUSINESS WIRE)--Aug. 24, 2006--H&R Block Inc. (NYSE: HRB - News) today announced that it expects to record a provision for losses of $102.1 million (after-tax amount of $61.3 million or 19 cents per share) reflecting an increase to the estimated recourse liability recorded by Option One Mortgage Corporation for loan repurchases and premium recapture reserves. The expected provision includes $46.1 million related to loans sold during the quarter ended July 31 and an increase of $56.0 million related to loans sold in previous quarters. The Company expects to increase the estimated recourse liability primarily as a result of recent increases in loan repurchases from its loan sale transactions. The increased level of loan repurchases, which have been noted industrywide, are primarily due to a higher level of repurchase requests from loan buyers and an increase in early payment delinquencies

"It's a large amount, and a sign that subprime borrowers might be having more difficulties making payments," said Kartik Mehta, a senior analyst at FTN Midwest Securities Corp., who has a "buy" rating on the company. "They will have to buy back loans they made and subsequently sold."

"Because of increases in early payment delinquencies, we've had a recent increase in loan repurchases," H&R Block spokesman Nick Iammartino said. "We sell these loans later, but at a lower value."

nachfolgend daten aus dem letzten 10k filing
http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0000950137-06-007517&Type=HTML

das sind die reserven für die jetzt explodierenden rückkäufe in den jahren (geschäftsjahr hat am 30.4. geendet) 2006 2005 2004

Loan sale repurchase reserves
(0.18 %) (0.13 %) (0.20 %)


man beachte die lächerlich niedrige reserve die vorgehalten worden ist. in den letzten jahre man der bubble das ja noch kompensiert haben. wie die meldung oben zeigt fliegen ihnen diese niedrigen vorsorgen bereits in den ersten monaten um die ohren. bin gespannt wo wir den prozentsatz am ende des jahres sehen werden. tippe auf ne vervielfachung.


We originated $40.8 billion, $31.0 billion and $23.3 billion in mortgage loans during fiscal years 2006, 2005 and 2004, respectively. Information regarding our non-prime loan originations is as follows 2006 2005 2004
(fiscal year endet 30.04.)

Loan type:
2-year ARM
43.9% 61.6 % 63.4 %
3-year ARM
1.9% 4.0 % 5.2 %
Fixed 1 st
12.7% 17.7 % 28.7 %
Fixed 2 nd
4.9% 3.8 % 1.6 %
Interest only 1 st
21.1% 12.6 % 0.7 %
40-Year
13.4% 0.0 % 0.0 %
Other
2.2% 0.3 % 0.4 %
Percentage of fixed-rate mortgages
20.0% 22.1 % 30.4 %
Percentage of adjustable-rate mortgages
80.0% 77.9 % 69.6 %
Percentage of first mortgage loans owner-occupied
91.7% 92.6 % 92.9 %
Loan purpose:
Cash-out refinance
60.2% 63.5 % 67.1 %
Purchase
35.0% 30.8 % 26.0 %
Rate or term refinance
4.8%

The following table details the percent of non-prime loan origination volume and our loan origination branches by state, excluding our Retail channel, for fiscal years 2006 and 2005:

2006 2005
Percent of Number of Percent of Number of
State Volume Branches Volume Branches
California
24.5 % 6 21.8 % 8
Florida
10.7 % 3 7.2 % 4
New York
9.1 % 2 11.5 % 2
Massachusetts
6.7 % 2 8.4 % 2
New Jersey
5.1 % 1 5.3 % 3
Other
43.9 % 20 45.8 % 23
Loan sale repurchase reserves
(0.18 %) (0.13 %) (0.20 %)

a desaster in the making!

bleibt noch nachzutragen das die erhöhung der reserven mal eben satte 10% des erwarteten jahresgewinns gekostet hat. soviel zu günstigen bewertungen.....

denke bei der betrachtung dieser daten kann es kaum glimpflich enden.

gruß

jan-martin

upadte von herg greenberg/marketwatch

With H&R Block's (H&R Block) disclosure of loan losses at its subprime-mortgage unit, as it's forced to repurchase deadbeat loans, I think back to a story I did in 2002 on their loan business. At the time, Block execs and the guys at the top of Option One, its loan division, were telling me that world of subprime is misunderstood because it actually gets better the worse the economy gets. And, besides, they said they were conservative in their underwritings. To which I say (and said at the time, to myself, at least: ) "Uh-huh! And don't try to sell me that bridge!" You can only wonder when the ripple effect will hit the other sub-prime lenders, including NovaStar , which is no stranger to this column.

gruß

jan-martin

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