Wednesday, January 30, 2008

I Don't Get It
Tony Thompson has resigned as Chairman of Grubb & Ellis. The resignation is effective February 8th. There has to be a story behind this news. He orchestrated the merger of NNN and Grubb & Ellis, became Chairman in early December. Now he is resigning - strange. He still owns almost 14% of Grubb & Ellis stock. (This is probably why NNN merged with Grubb & Ellis and not a REIT because REIT rules do not allow an individual to own that much.) I wonder it it has something to do with GBE's stock price dropping from about $13 at the time of the merger announcement last May to under $5 today.

Tuesday, January 29, 2008

Housing Data
The housing data looks bleak. I am sticking with my gut that the housing market is at its bottom. Interest rates are lower than they have been in years and, anecdotally, I am seeing more "sold" signs in the neighborhood. I am hoping the data will reflect this. The data from the article linked above is for November, and I am still optimistic that bottom was reached in November or December.
I am waiting for IMH's quarterly report. The SEC website has an 8-K for IMH. It is a letter to investors. A pretty strange letter to say the least - the word obfuscate comes to mind. No mention on the status of the almost 30% of its portfolio of loans that matured in the fourth quarter of 2007. It stated that it was dropping its yield to less than 10% due in part to the prepayment of one loan, the proceeds of which had to be put in low yielding money market funds. In talking about defaults it states how much default interest the fund has earned. I guess we will have to wait for the 10-Q to get the real story.

Wednesday, January 23, 2008

Knew This Was Coming
People are walking away from their mortgages because they lost equity. Fools. I still believe the housing market has bottomed and these idiots and now deciding to default. I guess they will be the subprime borrowers during the next real estate craze.

Thursday, January 17, 2008

Bad News is Good News
This article from the Wall Street Journal states, among other things, that housing starts are at their lowest level since 1991. The tone of article is negative, but to me the lack of housing starts is going to lessen supply, which should help stabilize prices. So the bad news is good for the housing market. The housing market peaked in late summer 2005, so we are now two-and-a-half years into the decline. I still think the floor in housing prices was hit late last year. I will find out over the next several months as sales data is released.

The huge bank write-off announced this week are also positive for the housing market. Another case of bad news being good news. The banks can start with a clean slate and get back to making loans.

Another positive sign is the Fed's willingness to cut interest rates. The ten-year Treasury is under 3.7%, and if you believe Goldman Sachs and Pimco's Bill Gross, its yield is heading to 3.0%. This makes mortgage payments lower and houses more affordable.

Wednesday, January 09, 2008

Countrywide v. Mortgage Fund That Won't Be Named (MFTWBN)
Countrywide posted loan data today that showed delinquent loans at 7.20% of its portfolio and loans into foreclosure of 1.04%. Countrywide's stock has fallen almost 50% in just the last week and at $5.12 per share is barely trading above bankruptcy levels. Compare this to MFTWBN that at third quarter-end (9/30/2007) had a 16.6% delinquency rate and 3.8% of its loans in foreclosure. If the market is betting Countrywide is going to go bankrupt what does it imply for MFTWBN? I'll tell you what it implies - Holy Shit! Plus, Countrywide is still making loans and actually saw a 1% growth in loans in December over November's rate. MFTWBN has temporarily stopped making loans. I expect disaster in MFTWBN's year-end financial statement.

Monday, January 07, 2008

I predicted the resignation of the Merrill, Citigroup and Bear Stearn CEOs. James Cayne just resigned to complete my mortgage meltdown resignation prediction trifecta. Like the other two numb-nuts he is probably walking away with a ton of dough.

Wednesday, January 02, 2008

Mendoza Line
The ten-year Treasury can't get away from 4.00%. Near Christmas is was approaching 4.30%, but this morning, the first trading day of the new year, it is back under 4.00%.