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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Zero Hedge

Where COVID Cases Are Growing The Fastest

Courtesy of ZeroHedge View original post here.

COVID-19 cases are growing in many countries around the world, but, as Statista's Katharina Buchholz details below, some are hit harder than others. Numbers by Johns Hopkins University published on Our World in Data show that among the highly affected countries with rising ...



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Phil's Favorites

Have Bear Markets Changed Forever?

 

Have Bear Markets Changed Forever?

Courtesy of 

We’ve never seen a bear market like the one we just lived through. Nothing comes close in terms of how quickly it started and how quickly it ended.

In just 19 days, the Dow was 20% below its highs. In 22 days, it was 30% below. And in just 27 days, it was all over. The bottom was in. To call this unusual is an understatement. You can see in the chart below that most bear markets take literally hundreds of days to bottom.

This entire bear marke...



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Digital Currencies

A Unifying Theory of Everything

 

A Unifying Theory of Everything

Courtesy of Scott Galloway, No Mercy/No Malice@profgalloway

This week, New York Magazine let me go full stream of consciousness on … everything. Their editor pitched me the idea to articulate a unifying theory on “this whole crazy techno-fiscal moment.” Problem is, while I understand crypto better than 99 percent of people, I do not understand crypto.

On Wednesday, crypto pioneer Coinbase listed shares on the NASDAQ, and closed the day at an almost $100 billion valuation, making it nearly as valuable as Goldman Sachs. Coinbase’s big day made a bunch of wealthy people wealthier, but it also poked several bears — ...



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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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Biotech/COVID-19

Scientists are on a path to sequencing 1 million human genomes and use big data to unlock genetic secrets

 

Scientists are on a path to sequencing 1 million human genomes and use big data to unlock genetic secrets

A complete human genome, seen here in pairs of chromosomes, offers a wealth of information, but it is hard connect genetics to traits or disease. HYanWong/Wikimedia Comons

Courtesy of Xavier Bofill De Ros, National Institutes of Health

The first draft of the human genome was publ...



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Chart School

Money Printing Asset Price Targets

Courtesy of Read the Ticker

The FED giveth and the FED taketh away. Right now the FED is giving a lot into 2022 US Mid Terms. 

Unless the FED breaks the market, here are some BRRRRR asset price targets, not normal price targets but money printing adjusted price targets. 


BITCOIN 175,000 to 500,000 USD

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DOW to 40,000 to 50,000

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More DOW

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Politics

Colombia gives nearly 1 million Venezuelan migrants legal status and right to work

 

Colombia gives nearly 1 million Venezuelan migrants legal status and right to work

Venezuelans wait at the Colombian border to be processed and housed in tents in 2020. All Venezuelans now in Colombia will receive a 10-year residency permit. Schneyder Mendoza/AFP via Getty Images

Courtesy of Erika Frydenlund, Old Dominion University; Jose J. Padilla, Old Dominion University...



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Kimble Charting Solutions

Will Historic Selloff In Treasury Bonds Turn Into Opportunity?

Courtesy of Chris Kimble

Long-dated treasury bonds have been crushed over the past year, sending ETFs like TLT (20+ Year US Treasury Bond ETF) spiraling over 20%.

Improving economy? Inflation concerns? Perhaps a combination of both… interest rates have risen sharply and thus bond prices have fallen in historic fashion.

Today’s chart looks at $TLT over the past 20 years. As you can see, the recent decline has truly been historic. $TLT’s price has swung from historically overbought highs to oversold lows.

At present, the long-dated bond ETF ($TLT) is trading 7.8% below its 200-...



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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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Promotions

Phil's Stock World's Weekly Webinar - March 10, 2021

Don't miss our latest weekly webinar! 

Join us at PSW for LIVE Webinars every Wednesday afternoon at 1:00 PM EST.

Phil's Stock World's Weekly Webinar – March 10, 2021

 

Major Topics:

00:00:01 - EIA Petroleum Status Report
00:04:42 - Crude Oil WTI
00:12:52 - COVID-19 Update
00:22:08 - Bonds and Borrowed Funds | S&P 500
00:45:28 - COVID-19 Vaccination
00:48:32 - Trading Techniques
00:50:34 - PBR
00:50:43 - LYG
00:50:48 - More Trading Techniques
00:52:59 - Chinese Hacks Microsoft's E...



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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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