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

Airlines are going bust in droves, so why do so many people try to launch them?

 

Airlines are going bust in droves, so why do so many people try to launch them?

‘Taxi for Flybmi.’ G Tipene

Courtesy of Loizos Heracleous, Warwick Business School, University of Warwick

Yet another airline has collapsed – this time British operation Flybmi, costing almost 400 jobs as hundreds of flights were cancelled at short notice. It is the latest in a ...



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Zero Hedge

Elon Musk Takes Out $50 Million in New Loans, Mortgaging Five Homes

Courtesy of Zero Hedge

We were one of the very first to speculate that Elon Musk had mortgaged 5 of his homes in late January, when we highlighted research by an internet sleuth on Musk's personal financial situation. According to public records cited by Tesla skeptic EVent Horizon and laid out in a timeline on Sutori in late January, Elon Musk looked as though he had leveraged some of his personal real estate.

A follow up report from Bloomberg ha...



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ValueWalk

Ray Dalio Gives 3 Financial Recommendations For Millennials

By Jacob Wolinsky. Originally published at ValueWalk.

Founder, Chairman and Co-Chief Investment Officer of Bridgewater Associates Ray Dalio talks to Julia La Roche in 2018 of Yahoo Finance about the value of savings and investing.

Ray Dalio Gives 3 Financial Recommendations For Millennials

Q4 hedge fund letters, conference, scoops etc

Trans...



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Kimble Charting Solutions

Giant Topping Pattern Could Be Forming, Says Joe Friday

Courtesy of Chris Kimble.

The first fact of the day; The long-term trend for tech remains up and the decline into the lows on Christmas Eve DID NOT break this trend!

This chart looks at NDX 100 ETF (QQQ) on a weekly basis over the past 14-years. For the past decade, since the lows in late 2009, QQQ has remained inside of rising channel (1). As you can see the decline into the end of the year lows, did nothing more than test support, which held and a strong rally has followed!

Over the past few months, QQQ could be forming a “Head & Shoulders&...



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Insider Scoop

Salesforce.com's Q4 Report Should Trigger Higher Valuation, Says Bullish Oppenheimer

Courtesy of Benzinga.

Related CRM Oppenheimer Praises HubSpot's Execution, Downgrades On Valuation Benzinga's Top Upgrade...

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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: Thursday, 02 August 2018, 07:48:20 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: $600 BN interest payments for US gov, print baby print



Date Found: Sunday, 05 August 2018, 09:22:26 PM

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Comment: Hire FED interest rates always brings double trouble



Date Found: Monday, 06 August ...

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Digital Currencies

Cryptos Are Surging: Bitcoin, Ethereum Hit One-Month Highs As Institutions Dip Toes

Courtesy of Zero Hedge

Cryptocurrencies are surging while the US equity markets take the day off. Ethereum is up over 18% from Friday's 'close' and the rest of the crypto space is a sea of green. While no immediate catalyst (headline or technical level) is clear, increasing chatter over institutional investors dipping their toes in the space have prompted an extension of the positive trend.

A sea of green...

Source: Coin360

Ethereum is leading the charge follow...



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Biotech

Cancer: new DNA sequencing technique analyses tumours cell by cell to fight disease

Reminder: We are available to chat with Members, comments are found below each post.

 

Cancer: new DNA sequencing technique analyses tumours cell by cell to fight disease

Illustration of acute lymphoblastic leukaemia, showing lymphoblasts in blood. Kateryna Kon/Shutterstock

Courtesy of Alba Rodriguez-Meira, University of Oxford and Adam Mead, University of Oxford

...

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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

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