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

The case of Biden versus Trump - or how a judge could decide the presidential election

 

The case of Biden versus Trump – or how a judge could decide the presidential election

Will judges decide who wins the presidential election? Geoff Livingston/Getty

By John E. Finn, Wesleyan University

Imagine the morning of Wednesday, Nov. 4, 2020. Given the unprecedented number of mail-in votes this election, Americans may wake up and still not know who won the presidential contest between Republican President Donald J. Trump and Democratic...



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Politics

The case of Biden versus Trump - or how a judge could decide the presidential election

 

The case of Biden versus Trump – or how a judge could decide the presidential election

Will judges decide who wins the presidential election? Geoff Livingston/Getty

By John E. Finn, Wesleyan University

Imagine the morning of Wednesday, Nov. 4, 2020. Given the unprecedented number of mail-in votes this election, Americans may wake up and still not know who won the presidential contest between Republican President Donald J. Trump and Democratic...



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ValueWalk

Financial Strategies for Businesses During COVID-19

By Ankur Shah. Originally published at ValueWalk.

The COVID-19 pandemic has left no business unaffected in many different ways. Most are taking a financial hit across industries. Some may not last through it all.

Q2 2020 hedge fund letters, conferences and more

In order to keep your organization afloat, you’ll need to employ a variety of strategies, technological and otherwise. Here are some ways to plan ahead and help your business survive.

Plan for Different Time Periods and Scenarios

Nobody knows how lon...



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Biotech/COVID-19

SARS-CoV-2 infection can block pain, opening up unexpected new possibilities for research into pain relief medication

 

SARS-CoV-2 infection can block pain, opening up unexpected new possibilities for research into pain relief medication

The spike protein on SARS-CoV-2 interferes with pain perception. SEBASTIAN KAULITZKI/SCIENCE PHOTO LIBRARY/Getty Images

By Rajesh Khanna, University of Arizona

Imagine being infected with a deadly virus that makes you impervious to pain. By the time you realize you are infected, it’s already too late. You have spread it far and wide. Recent findings in my lab suggest that this scenario may be one rea...



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Zero Hedge

2020 Has Been A "Nightmare Year" For America, And The Economic Fallout Is Just Getting Started

Courtesy of Michael Snyder via The Economic Collapse blog

Most of us have never experienced a year that has been as tough as 2020 has been for our nation.  It has just been one major crisis after another, and the month of September has brought us even more trouble.  The worst wildfire season in the history of the state of California has been making headlines day after day, and now the passing of Ruth Bader Ginsburg threatens to escalate the political turmoil in this nation to an entirely new level. 

 

...



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Kimble Charting Solutions

Could It Be "Schitts Creek" For Technology Stocks If Selling Starts Here?

Courtesy of Chris Kimble

The Nasdaq has been the unparalleled leader of the stock market in 2020, having rallied furiously off the COVID-19 crash market bottom in March.

But all of the excitement around tech stocks and the comeback in the stock market may be coming to an end… that is, if a key Fibonacci price target has anything to do with it!

In today’s chart, we look at the long-term “monthly” chart of the Nasdaq Composite Index (IXIC) and focus in on the 18-year rally.

As you can see, the Nasdaq peaked in 2000 and bottomed in 2002. Applying Fibona...



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Chart School

Stocks are not done yet - Update

Courtesy of Read the Ticker

There are a few times in history when a third party said this US paper (stocks, funds or bonds) is worthless.

Here is two.

1) 1965 Nixon Shock - The French said to US we do not want your paper dollars please pay us in gold. This of course led to the US going off the gold standard.

2) 2007 Bear Stern Fund Collapse - Investors said their funds collateral was worth much less than stated. This of course was the beginning of the great america housing bust of 2008.


In both cases it was stated .."look the Emperor is naked!"... (The Empe...

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Digital Currencies

Cryptocurrencies Rarely Used To Launder Money, Fiat Preferred

Courtesy of ZeroHedge View original post here.

Authored by Shaurya Malwa via Decrypt.io,

Traditional channels continue to dominate the estimated $2 trillion global money laundering racket instead of cryptocurrencies, a report says.

In brief
  • Money laundering via cryptocurrencies is not a preferred tool for criminals, a report said...



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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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Promotions

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Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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