Posts Tagged ‘Delinquencies’

Credit Card Delinquencies, Chargeoffs Rise Again; Bank of America Has Credit Card Headaches

Credit Card Delinquencies, Chargeoffs Rise Again; Bank of America Has Credit Card Headaches

Courtesy of Mish

Credit Card Transaction

Given there has been a financial recovery of sorts, but no recovery at all on main street, it should not be surprising to see Credit-Card Delinquencies Rise Again.

The rate of charge-offs on U.S. credit cards rose more than a half-percentage point in November, snapping a two-month run of drops from an all-time high in August, and delinquencies rose for the fourth consecutive month, Moody’s Investors Service said.

Charge-offs, which are those loans a credit-card company doesn’t think it will be able to collect, were 10.6% for November, compared with 10% in October. The ratings firm also said the delinquency rate, which gives a glimpse of issuers’ potential losses and how much they may need to set aside in reserves, rose to 6.2% in November.

Bank of America Now Choking on Growth at any Cost Policy

Please consider New Chief at Bank of America Seeks Credit-Card Fix 

When Bank of America Corp.’s new chief executive takes over next week, one of the first problems he will face is one he’s already been grappling with—the bank’s credit-card business.

"We gave a lot of cards out to our customers," Mr. Moynihan said in a Nov. 5 speech. "We were giving them to too many people." He discussed a "repositioning" of the business that would rely less on borrowing and more on card transactions, while acknowledging that the business won’t be as big or as profitable as it used to be.

Bank of America is the second-largest U.S. card issuer, after J.P. Morgan Chase & Co., and the card division accounts for 23% of BofA’s revenue through the first nine months of 2009. Yet cards also lost $4.5 billion during that same period, making it the worst-performing Bank of America business line. It also had a default rate higher than other major rivals, at 13%.

The current problems have their root in Bank of America’s push to become No. 1 in the card business. In 2006, it purchased MBNA Corp., one of the nation’s biggest credit card issuers, for $35 billion, hoping to combine the card company’s marketing and underwriting skills with its own massive branch network.

But in its pursuit of market share, Bank of America made poor underwriting


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Cure Rates On Prime Loans Drops Ominously

Cure Rates On Prime Loans Drops Ominously

Courtesy of Tom Lindmark at But Then What

This is a pretty important bit of information from HousingWire.

A slower cure rate among delinquent loans erased improvements in the number of loans rolling into delinquency status among US residential mortgage-backed securities (RMBS), according to Fitch Ratings.

Cure rates decrease as fewer delinquent loans return to current payment status each months. The prime cure rate slipped from an average 45% during ‘00-’06 to 6.6% today. Alt-A cure rates dropped to 4.3% from an average 30.2% and subprime cure rates fell to 5.% from an average 19.4%.

“Recent stability of loans becoming delinquent do not take into account the drastic decrease in delinquency cure rates experienced in the prime sector since the peak of the housing market,” said managing director Roelof Slump in a corporate statement.

“Whereas prime had previously been distinct for its relatively high level of delinquency recoveries,” Slump added, “by this measure prime is no longer significantly outperforming other sectors.”

The article suggests that the decline in cure rates is related to the fact that so many borrowers are underwater. Obviously, that’s a factor but I think that there might be a couple of other reasons.

For one, Fannie and Freddie let their loan standards slip markedly in the time period mentioned in the Fitch study. While they more or less held the line on FICO scores, they continued to underwrite higher and higher LTV loans and their debt service requirements were stretched beyond reason, or at least beyond reason if you factored in anything other than a good economy.

The second factor is the economy. More to the point, I don’t think that the statistics are truly capturing the hit to income that a lot of homeowners are taking. The unemployment rate is the headline number but a toll is being taken on households as salary reductions and enforced furloughs spread through the economy. In many cases, homeowners were operating on too thin a margin for the hit they’re taking and can’t cure their delinquencies by tightening their belts any further. There just isn’t any fat left to cut in a lot of budgets.

Unless the trend in cure rates starts to move the other way, any improvement in overall delinquencies is not going make a meaningful difference. Quite the contrary, we might be looking…
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New home sales flat, delinquencies surge

Courtesy of Tim Iacono at The Mess That Greenspan Made

New home sales flat, delinquencies surge

The Commerce Department reported(.pdf) a modest increase in new home sales during April, far less than analysts had expected, and sales prices continued to tumble.

IMAGE April new home sales rose 0.3 percent to an annual rate of 352,000, up from a downwardly revised level of 351,000 in March that was previously reported as 356,000 units.

The median sales price rose 3.7 for the month but fell 14.9 percent from a year ago to just $209,700, a figure that is still heavily influenced by builder incentives that, in many cases, total many thousands of dollars.

In an optimistic sign for the depressed home building industry, the inventory of unsold homes dropped to its lowest level in eight years, down 4.2 percent in April to 297,000, helping to reduce the supply of unsold homes to just 10.1 months, the lowest reading since February of last year.

The bigger housing news this morning was probably the Mortgage Bankers Association report that mortgage delinquencies and foreclosures rose to new all-time highs during the first quarter of the year.

The U.S. delinquency rate rose to 9.1 percent and 1.4 percent of all home loans entered foreclosure between January and March, both figures the highest ever since the organization began keeping records back in 1972.

Of course, mortgage rates that are now surging even faster than foreclosure rates are not going to make it any easier for the housing market to rebound. While Freddie Mac reported 30-year fixed mortgage rates rising to 4.91 percent in their weekly survey, in a WSJ report from this morning, mortgage data publishing firm HSH Associates said that average 30-year mortgage rates jumped from 5.03 percent to 5.29 percent just yesterday.

It looks like the Federal Reserve needs to get busy buying some more U.S. Treasuries and mortgage securities or, before we know it, freakishly low long-term rates (widely believed to be a necessary prerequisite for an economic recovery) will soon be a thing of the past.

 


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Phil's Favorites

Why Jack Dorsey's Square paid a record $39 billion for Afterpay

 

Why Jack Dorsey’s Square paid a record $39 billion for Afterpay

Courtesy of Lien Duong, Curtin University and Sonny Pham, Curtin University

The A$39 billion (US$29 billion) that Twitter founder Jack Dorsey’s digital payments company Square is paying to acquire Australian upstart payments outfit Afterpay is the biggest takeover deal in Australian corporate history.

It surpasses the A$32 billion European commercial real estate giant Unibail-Rodamco agreed to pay for Frank Lowy’s Westfield Corporation in 2...



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Zero Hedge

Texas Judge Blocks Governor's Order Halting Transport Of Covid-Positive Illegals

Courtesy of ZeroHedge View original post here.

In a short-term victory for the Biden administration, a federal judge in Texas blocked an executive order which restricts the transport of infected illegal immigrants on Tuesday, suggesting that the order itself would have the effect of "exacerbating the spread of COVID-19."

U.S. District Judge Kathleen Cardone of El Paso agreed with the Justice Department, which accused Governor Greg Abbott (R) of potentially worsening the spread of the virus - as impeding the transfer of undocumented migrants would prolong the ...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Saturday, 13 March 2021, 06:40:57 PM

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Comment: @crossbordercap Peak liquidity already evidence from our GLI momentum signal...has 6-9 month lead-time on markets and 15-20 months on economies



Date Found: Friday, 19 March 2021, 10:55:22 PM

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Comment: ...



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Biotech/COVID-19

Americans Tend To Stick To Their Stance On COVID-19 Vaccines

 

Source: Bloomberg, via ZeroHedge

Courtesy of Felix Richter, Statista

As U.S. health officials and the Biden administration desperately try to kickstart the stalling rollout of COVID-19 vaccines in face of the highly contagious Delta variant, President Biden...



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Digital Currencies

What are stablecoins? A blockchain expert explains

 

What are stablecoins? A blockchain expert explains

Stablecoins promise more stability than other cryptocurrencies. DenBoma/iStock via Getty Images

Courtesy of Stephen McKeon, University of Oregon

Stablecoins are a type of cryptocurrency linked to an asset like the U.S. dollar that doesn’t change much in value.

The majority of the dozens of stablecoins that currently exist use the dollar as their benchm...



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Politics

Bipartisan infrastructure deal begins to address consequences of a warming planet: 3 essential reads

 

Bipartisan infrastructure deal begins to address consequences of a warming planet: 3 essential reads

A lot of coastal infrastructure wasn’t designed for the frequent flooding and crashing waves brought by rising seas. Jeffrey Greenberg/Universal Images Group via Getty Images

Courtesy of Bryan Keogh, The Conversation and Stacy Morford, The Conversation

...



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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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