It’s time for an update on the real estate bubble, which I have been watching since 2003. About a year ago, I laid out a timeline for the real estate boom. Knowing real estate happens in 16-year cycles, I juxtaposed the last boom/bust cycle in the early 90’s onto this cycle. Here’s what I came up with:
1990 (2007): Prices take a serious plunge. One article claims that housing booms are a bad thing and we should hope prices stay low. Increasing mortgage rates are blamed for the bust. The word “recession” is mentioned. Gloom and doom.
That’s next year. How many times do you think you will hear the words “looming recession” next year? More than you want to, that’s for sure…
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Filed under Housing Market, Mortgage News, Economy, Real Estate, Secondary Mortgage Market, Fannie Mae, Market Forecast, Mortgage Blog, Housing Crash, subprime meltdown, Lending guidelines by Godfather
Aug. 15 (Bloomberg) — Countrywide Financial Corp., the biggest U.S. mortgage lender, fell for the fifth consecutive day on the New York Stock Exchange after Merrill Lynch & Co. raised the possibility of bankruptcy.
“Effective insolvency'’ would result should creditors force Countrywide to sell assets at depressed prices or investors lose confidence in its ability to raise cash, Kenneth Bruce, a Merrill analyst in San Francisco, said in a research note today.
Shareholders shouldn’t “understate the importance of liquidity,'’ Bruce wrote. “If liquidations occur in a weak market, then it is possible for CFC to go bankrupt,'’ said Bruce, who downgraded Countrywide to “sell'’ from “buy.'’ The company trades under the ticker CFC.
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PARIS (AP) — A major French bank, BNP Paribas, announced Thursday that it was suspending three of its asset-backed securities funds, saying it could no longer value them accurately because of problems in the U.S. subprime mortgage market.The announcement by the bank’s BNP Paribas Investment Partners unit sent shock waves through an already sensitive money market.
The bank, France’s largest bank by market value, said it was suspending three funds worth a total of 2 billion euros ($2.75 billion): Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia. All funds combined at BNP Paribas Investment Partners are worth more than 350 billion euros ($482.79 billion).
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Filed under Mortgage News, Finance, Credit, Secondary Mortgage Market, Mortgage Blog, Bond Market, subprime meltdown, Lending guidelines, credit crunch, Alt-A Mortgage, Lenders, Liquidity Crisis by Godfather
Defaults are ripping through the entire mortgage bond industry at the fastest pace in years.
Investors hold about $6.5 trillion in mortgage bonds, the world’s largest such fixed-income market, says the Securities Industry Financial Markets Association.
Meanwhile, Securities and Exchange Commission chief Chris Cox said the SEC is coming up with new, more flexible accounting rule interpretations that companies and others could use to avoid declaring their mortgage securities in default.
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