Thursday, September 28, 2006

Home-Equity Loss Rate Rises to Most Since 2001

so langsam müßten eigentlich die käufer der mbs aufwachen und höheren risikoprämien verlangen. die meldungen von problembeladenen krediten häufen sich

dank geht an mish

Home-Equity Loss Rate Rises to Most Since 2001, Moody's Says

Sept. 27 (Bloomberg) -- The rate of losses on U.S. home- equity loans in June reached its worst level since 2001 because of more foreclosures, Moody's Investors Service said.

The loss rate climbed to 1.05 percent of total loans from 0.8 percent in June 2005, Moody's said in a statement yesterday. The amount of loans with payments more than 60 days late rose to 6.76 percent from 5.86 percent. There were $551.1 billion of securities backed by home-equity loans outstanding at the end of last year, according to the Bond Market Association.

Destruction from Hurricane Katrina in Louisiana, Mississippi and Alabama last year along with layoffs in the Detroit area by carmakers Ford Motor Co. and General Motors Corp. this year have left more people unable to pay bills, said Michael Youngblood, a Friedman Billings Ramsey & Co. analyst.

``We have seen much greater weakness in the rust belt cities than anticipated,'' Youngblood said in an interview today. das kommt von dem typen der vor einigen wochen diese gesagt hat/this comes from the guy who predicted this a few weeks ago

Housing prices will rise in each of the next four quarters, but by progressively slower rates year over year: 7.1% in 2Q 2006; 5.7% in 3Q 2006; 4.4% in 4Q 2006 and 3.5% in 1Q 2007.
rest vom genius youngblood

The share of mortgages entering foreclosure at the end of June was the highest since the fourth quarter of 2004,.....

Losses and delinquencies may affect the prices of asset- backed securities of home equity loans, the biggest part of the $1.96 trillion asset-backed securities market, which also includes automotive, credit-card and student loans. At the end of last year, securities outstanding backed by home-equity loans accounted for roughly 28 percent of the asset-backed market.

Morgan Stanley was the biggest issuer of home-equity asset- backed securities in the first half of this year was with $24.1 billion in proceeds, according to a July 14 report by Citigroup Inc. analyst Mary Kane. There were $13.5 billion new home-equity sales by all issuers last week, Bank of America strategist Yingwei Chen said in a report yesterday.

The yield premiums on floating-rate home-equity loans fell to 83 basis points, or 0.83 percentage point, over Treasuries with similar maturities from 86 basis points a year ago, according to Merrill Lynch.



Anonymous Bob_in_Ma said...


Good catch. Perhaps the most inteesting line is the last one. The loss rate increased and the yield premium fell! Buyers are asking for less money to take on more risk...

I think that's the really big question now. The housing crash will definitely cause a recession, but will the miss-pricing of risk cause something much worse? If so, it will be world-wide. Many, if not most, of those bonds are held buy foreigners.

7:42 AM  

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