Monday, March 26, 2007

Home Depot
Shopping at The Home Depot is unpleasant. A trip to The Home Depot is such a time sucker, unless you are picking up a specific item or shopping in a specific department. I went Saturday morning to pick up a eight items and it took close to forty-five minutes! I always have to ask someone where products are - despite having shopped at this store for fifteen years - and the employee, more often than not, has no better idea than I do where products are located (and it did not have half the items I was shopping for). The favorite words are "it's not my department, but..." When I got the checkout line (the self-serve checkout is useless unless you are buying three items or less and using a credit card) the line was long because one of the checkers was on a break. Who is already on break at 8:30 in the morning? Lowe's is no better.

Wednesday, March 21, 2007

Subprime
My hectic work schedule has coincided with the fast demise of the subprime market so posting has been nonexistent as the subprime market unraveled. I don't have much to add to what has already been written in various publications. It's funny that more people did not see this coming. The stock market's reaction has been surprising. One would think that poor lending practices would have been priced into the market. Maybe the scare is behind us as the market is 350 points from its high and subprime lenders are able to sell assets to raise cash. Smart money is searching for value.

Monday, March 05, 2007

See Ya!
Is the fat lady singing? It is amazing how fast this mortgage mess is unraveling. How is it possible for these companies to fall apart this fast? I say "these companies" because I don't believe New Century is alone or will be the only casualty. The subprimes, lead by New Century, fell today. The forensic accounting will be interesting and the mess will be revealed to have been in plain sight the whole time. No documentation/verification loans to bad credits leads to mess.

Sunday, March 04, 2007

More Subprime Info
Here is a good article from the New York Times. New Century is now under Fed investigation. Now that we've had the disclosure of all the bad loans, financial restatements and dividend cuts are the next step. Investigations and new regulations will follow that.

Thursday, March 01, 2007

Spreading Fast
The default fever on mortgages is spreading fast. Starting in subprime mortgages, the default wave has now reached better credit borrowers. Countrywide just announced a sharp increase in late payments, including those with good credit. Uh-oh. Here is a key passage:

The new data come amid growing anxiety about a surge in late payments on subprime loans, which accounted for about a fifth of all new home mortgages granted last year. While prime loans are performing much better and the vast majority of Americans are keeping up on payments, some analysts fret the damage is starting to creep up the credit spectrum and won't be confined to subprime borrowers.
Bankers need to get their heads together and solve the mess they have made. Bankers relaxed credit standards and created exotic mortgages that the borrowers did not understand. The bankers outsmarted themselves. The exotic mortgages can make the lenders big money, but the profits start to evaorate when the borrower stopes making payments. The banks are going to need property management divisions.

Innocent homeowners are going to be hurt if the defaults accelerate the fall in home prices and start erasing equity. Fannie Mae's statement that it won't buy certain exotic mortgages anymore is a good start. It will slow the creation of these loans as underwriters won't make loans they cannot sell. But it is a case of closing the barn door after the animals have left.