Posts Tagged ‘Ginnie Mae’

GMAC at the Forefront of Ginnie Mae’s Troubled Issuers

GMAC at the Forefront of Ginnie Mae’s Troubled Issuers

Courtesy of Mish

In response to Taxpayers On The Hook For Ginnie Mae’s Rampant Growth I received a nice Email from the Center for Public Integrity inviting me to take a look at Ginnie Mae’s Troubled Issuers. The data is interesting to say the least.

Problem Issuers by Compare Ratio

gennie mae's troubled issuers

Compare ratio is the comparison of a lender’s default rates with other lenders in a geographic region as defined by HUD. For example, if a lender has a compare ratio of 200 percent, the Federal Housing Administration loans made by that lender are defaulting at twice the rate of its competitors in its geographic region. A compare ratio of 200 percent or more is grounds for suspension and a compare ratio of 150 percent or more indicates "a problem" lender, according to FHA Commissioner David Stevens.

Compare Ratios Over 150%

  • Pine State Mortgage Corporation – 314% – Default Rate 18.86%
  • Premium Capital Funding, LLC dba Topdot Mortgage – 238% – Default Rate 14.31%
  • Ideal Mortgage Bankers, Ltd, dba Lend America^ – 235% – Default Rate 14.14%
  • IndyMac FSB, dba OneWest Bank – 211% – Default Rate 12.67%
  • First Horizon Home Loans dba First Tennessee – 207% – Default Rate 12.45%
  • First American Mortgage Trust – 205% – Default Rate 12.31%
  • First Guaranty Mortgage Corp. – 204% – Default Rate 12.26%
  • American Financial Resources, Inc. – 202% – Default Rate 12.16%
  • Weststar Mortgage Corporation – 198% – Default Rate 11.88%
  • Gateway Mortgage Group – 198% – Default Rate 11.9%
  • Colonial Bank – 189% – Default Rate 11.38%
  • MVB Mortgage Corporation – 183% – Default Rate 11.01%
  • GMAC Mortgage – 171% – Default Rate 10.29%
  • Allied Home Mortgage Corporation – 168% – Default Rate 10.09%
  • Taylor Bean & Whitaker Mortgage^ – 163% – Default Rate 9.77%
  • Shore Financial Services, Inc. dba Shore Mortgage – 159% – Default Rate 9.54%

Problem Issuers by Loan Volume

The charts in the article are interactive so please give it a look.

GMAC – The Gift That Keeps On Giving

None of the above banks should be doing business with Ginnie Mae. Indeed, most of them should not be doing business at all, especially GMAC.

To help bailout GM , the Obama administration screwed the bondholders to appease the unions, and taxpayers


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Taxpayers On The Hook For Ginnie Mae’s Rampant Growth

Mish sums it up well:  "Government is the mortgage lender of last resort, the job provider of last resort, and the auto manufacturer of last resort, places government has no business being at all. Government spending has gone wild and all we have to show for it is trillions of dollars worth of debt, 10% unemployment, troops in 150 countries, two wars, and 35 million on food stamps." – Ilene

Taxpayers On The Hook For Ginnie Mae’s Rampant Growth

Courtesy of Mish 

The Center for Public Integrity and The Washington Post collaborated nicely on a report detailing problems at Ginnie Mae.

Please consider Mortgage agency’s growth gives fuel to risky lenders.

The trouble signs surrounding Lend America had been building for years. A top executive was convicted of mortgage fraud but still helped run the company. Home loans made by its headquarters were defaulting at an extremely high rate. Federal prosecutors alleged in a civil suit that the company falsified loan documents and committed fraud.

Yet despite these red flags the Government National Mortgage Association, known as Ginnie Mae, authorized the firm to bundle its mortgages into securities and sell them to investors around the world — all backed by U.S. taxpayer money.

Lend America is hardly the only lender with a troubled record that Ginnie Mae has endorsed. The agency has provided taxpayer backing to at least 36 other mortgage companies with a history of reckless lending, fines or other sanctions by state and federal regulators or civil lawsuits, according to an analysis of government records, court documents and statistics in a HUD database.

"Ginnie is like an accelerant to a fire," said Anthony Sanders, professor of real estate finance at George Mason University.

HUD Inspector General Kenneth Donohue said Ginnie Mae is too accommodating of problem lenders, adding that the agency has put its highest priority on ensuring that money is pumped into the mortgage market.

"Ginnie Mae is in the business of trying to bring in business," he said.

Lenders with spotty histories and poor financial health have sold nearly $100 billion in loans packaged into Ginnie Mae-guaranteed securities in the past two years, according to calculations based on data provided by Inside Mortgage Finance, a trade publication.

Sixteen mortgage lenders endorsed by Ginnie Mae have been cited by various federal regulators for unsafe banking practices, insufficient capital or


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Setting Up the Next Leg Down in Housing

Setting Up the Next Leg Down in Housing

housing market Courtesy of Charles Hugh Smith of Of Two Minds

Loose lending standards in government-backed mortgages is setting up the next wave of defaults and sharp declines in housing prices.

Beneath the hype that housing has bottomed is an ugly little scenario: lending standards are still loose and the low-down payment, high-risk loans being guaranteed by government agencies are setting up the next giant wave of defaults and foreclosures.

You might have thought that the near-demise of risky-mortgage mills Fannie Mae and Freddie Mac would have cooled the supply of highly leveraged government-guaranteed mortgages--but you’d be wrong, for the Feds have compensated for the implosion of the Fannie/Freddie housing-bubble machines by ramping up their other two mortgage mills: FHA and Ginnie Mae.

These GSEs (government sponsored enterprises) have been around for decades, and have been generally successful due to tightly controlled lending standards.

But the order "save the housing market at all costs!" has been passed down, and the spigots of easy mortgage money have opened. Where FHA only underwrote 3% of the mortgages originated in 2006, now it guarantees about 25%. Between FHA and its VA mortgage sibling, these two GSEs now back fully 40% of all mortgages.

Down payments are as low as 3.5%, and so a first-time buyer making use of his/her $8,000 tax credit could essentially buy a $225,000 house with virtually no money down.

This is moral hazard writ large. Let’s see, the mortgage originator can’t lose because the FHA or Ginnie Mae assumes the risk of default, and the borrower can’t lose more than the few hundred bucks he/she "invested" in closing costs.

In other words, the Federal government has attempted to keep the housing market afloat by ramping up its remaining mortgage mills to fill the easy-money mortgage gap left by the insolvent Freddie and Fannie.

The only problem with this blatant pumping is that a staggering number of these wonderful FHA and Ginnie Mae mortgages are in default and thus doomed to enter the foreclosure pipeline.

Here is a report on the looming FHA fiasco from the Wall Street Journal:

Loan Losses Spark Concern Over FHA:

In the past two years, the number of loans insured by the FHA has soared and its market share reached 23% in the second quarter, up from 2.7% in 2006, according to Inside


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Fed’s Proposed Framework for Addressing “Systemic Risk” Misses the Moving Target

Fed’s Proposed Framework for Addressing "Systemic Risk" Misses the Moving Target

Courtesy of Mish

The Federal Reserve Bank of Cleveland is proposing a three-tiered system for regulating systemically important financial institutions (SIFI)

  • Tier one would include high-risk institutions, such as large, interstate banks and multi-state insurance companies.
  • Tier two would include moderately complex financial institutions, such as larger regional banks.
  • Tier three would include non-complex financial institutions, such as community banks.

Each would receive varying degrees of oversight and regulation. In the accompanying video, the author claims: "Really bad drawings…real simple explanations".

Drawing Board : How To Address SIFI

SIFI Framework

  • Size: As a starting point for a size-based definition, a financial firm would be considered systemically important if it accounts for at least 10 percent of the activities or assets of a principal financial sector or financial market or 5 percent of total financial market activities or assets.
  • Contagion: A financial institution would be considered systemically important if its failure could result in the collapse or freezing up of one or more important financial markets.
  • Correlation: Correlation, as a source of systemic importance, is also known as the “too many to fail” problem.
  • Concentration: Concentration has two important aspects: the size of the firm’s activities relative to the contestability of the market. That is, concentration is less likely to make a financial institution systemically important if, other things being equal, the activities of a distressed institution can easily be assumed by a new entrant into the market or by the expansion of an incumbent firm’s activities. Hence, it is logical to adjust concentration thresholds to account for contestability.
  • Conditions/Context: [Pertains to the fragility of the markets at the time, for example ...] New York Fed’s reluctance to allow the failure of Long-Term Capital Management resulted largely from the fragility of financial markets at that time—due to the Southeast Asian currency crises and the Russian default.10 This might explain, in part, why LTCM was treated as systemically important and Amaranth (which was more than twice as big) was not. Another example would be intervention to prevent the bankruptcy of Bear Stearns by merging it (with assistance) into JPMorgan Chase in early 2008, whereas Drexel Burnham Lambert was allowed to enter bankruptcy in early 1990. Firms that might be made systemically important by conditions/context are probably the most difficult


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Phil's Favorites

The Trade Deficit Isn't the Boogeyman

 

The Trade Deficit Isn’t the Boogeyman

Courtesy of John Mauldin, Thoughts from the Frontline

I have to confess something: I run a huge trade deficit. It’s not with China or Mexico, but with Amazon. I buy all sorts of goods from them and Jeff Bezos has yet to spend a penny with me. It’s just not fair.

Sound ridiculous? That’s exactly what it is. Totally absurd. I like Amazon. I’m happy with the items the company ships to me and (I presume) Amazon is happy to receive my money. We both win.

The same kind of relationship exists between the US and China, although with a few twists we’ll discuss below. That’s not to say Chin...



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Zero Hedge

More Free Money For Banks: St Louis Fed Discloses 'A Carry Trade In Liquidity'

Courtesy of Mike Shedlock, MishTalk

Not only do banks earn free money on excess reserves, they can borrow money and make guaranteed free money on that.

The Federal Reserve Bank of St. Louis discusses the Carry Trade in Liquidity.

The IOER [interest on excess reserves] has been the effective ceiling of other short-term interest rates. The figure above compares the IOER with overnight rates on deposits and repos. ...



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Kimble Charting Solutions

S&P Testing Strong Support, With Fear Levels High!

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

This chart looks at the S&P 500 on a weekly basis over the past couple of years. Since the start of 2016, the S&P has spent the majority of the time inside rising channel (1).

In January the S&P hit the top of the rising channel and selling quickly took place, taking it down to test rising support in a matter of a couple of weeks.

The softness of late has the S&P facing rising channel support and its 200-day moving average at (2). 

CNN Fear & Greed Index-

...



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Insider Scoop

Marvell Holds Attractive Risk-Reward, BMO Says In Upgrade

Courtesy of Benzinga.

Related MRVL Benzinga's Top Upgrades, Downgrades For October 16, 2018 The Week Ahead: Q3 Earnings Season, Canada Decriminalize...

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Digital Currencies

Tether Tumbles Below Critical $1 Threshold As Dollar-Pegged Crypto Doubts Soar

Courtesy of ZeroHedge. View original post here.

Update: Careful to quickly assuage any potential loss of the narrative and 'full faith and credit' of the 'stablecoin', Tether released a statement on USDT drop:

"We would like to reiterate that although markets have shown temporary fluctuations in price, all USDT in circulation are sufficiently backed by U.S. dollars (USD) and that assets have always exceeded liabilities."

See, nothing to panic about.

*  *  *

The only cryptocurrency not rallying right now is the one pegged to the U.S. dolla...



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Chart School

Weekly Market Recap Oct 14, 2018

Courtesy of Blain.

Wednesday and Thursday finally brought some fireworks to a very complacent market.   The S&P 500 had not had a 1% move in 74 days until Wednesday’s drawdown.

Rising yields were nailed as the culprit but months of rallying eventually require some sort of shake out – whatever the catalyst.  Wednesday’s sell off was the worst day for the S&P 500 since February and the worst for the NASDAQ since June 2016.

The market losses are “a reaction from investors finally realizing we are in a higher interest-rate environment, and given the elevated level of stocks, market participants were likely looking for a reason to sell,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “Higher interest rates typically bring on tighter ...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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Members' Corner

Why obvious lies still make good propaganda

 

This is very good; it's about "firehosing", a type of propaganda, and how it works.

Why obvious lies still make good propaganda

A 2016 report described Russian propaganda as:
• high in volume
• rapid, continuous and repetitive
• having no commitment to objective reality
• lacking consistency

...

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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

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

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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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

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

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.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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All About Trends

Mid-Day Update

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

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

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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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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