Posts Tagged ‘strategic default’

Fannie Mae To Deny New Mortgages To Deadbeats, Aka Strategic Defaulters

Courtesy of Tyler Durden

It is now time to short Apple: Fannie Mae has just announced that it will no longer condone the same kind of irresponsible behavior that the Obama administration will soon be trying hard to codify into law, namely strategic defaulting. According to Dow Jones, bankrupt GSE Fannie Mae, announced "it won’t back new mortgage loans for seven years for homeowners who walk away from their mortgages although they were able to pay or did not seek a workout in good faith with their lender." Terence Edwards, an EVP for Fannie, after having been a recipient of trillions in moral hazard (and having a job as a result), finds out that being on the receiving end of a total lack of integrity is not quite as pleasant: ""We’re taking these steps to highlight the importance of working with your servicer. Walking away from a mortgage is bad for borrowers and bad for communities." Oh, now they tell us.

More humor from Dow Jones, as the GSEs finally realize just how screwed they are:

 

Fannie Mae said it also will sue borrowers who strategically default on their loans to recoup the outstanding mortgage debt in jurisdictions that allow for deficiency judgments.

Strategic defaults are becoming more common, various studies show --  a Morgan Stanley report pegged them at 12% of all home-mortgage defaults in February, up from "insignificant levels" three years ago. Lenders fear borrowers who "walk away" will greatly increase the industry’s foreclosure-related losses, which already total in the hundreds of billions of dollars.

In addition, growing social acceptance of this behavior could have ramifications not only for personal credit histories and the health of neighborhoods, but also for the future of mortgage lending, according to those studying the issue.

One possible reason the numbers are rising is some homeowners’ belief that lenders aren’t aggressively pursuing those who default, according to a report by the Chicago Booth/Kellogg School Financial Trust Index.

Our advice: short AAPL now. The Generation 293,394,459 iPhone (to be released by December 2010 at the latest) may not be the marginal boost to EPS that all analysts who think Apple at a $1 qunitillion market cap is a screaming buy, as US consumers soon realize that the choice between a gizmo and a roof to sleep under is really not all that tough. Alas, Obama’s plan to force…
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Strategic Default Data Suggests Foreclosure Prevention Tactics Useless

Strategic Default Data Suggests Foreclosure Prevention Tactics Useless

foreclosuresCourtesy of Mish  

An interesting report in the Los Angeles Times shows that a person with super-prime credit scores is more likely to walk away from an underwater mortgage than a person with a subprime credit rating.

Inquiring minds are reading Homeowners who ‘strategically default’ on loans a growing problem.

Who is more likely to walk away from a house and a mortgage — a person with super-prime credit scores or someone with lower scores?

Research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50% more likely to "strategically default" — abruptly and intentionally pull the plug and abandon the mortgage — compared with lower-scoring borrowers.

Among researchers’ findings are these eye-openers:

  • The number of strategic defaults is far beyond most industry estimates — 588,000 nationwide during 2008, more than double the total in 2007. They represented 18% of all serious delinquencies that extended for more than 60 days in last year’s fourth quarter.
  • Strategic defaulters often go straight from perfect payment histories to no mortgage payments at all. This is in stark contrast with most financially distressed borrowers, who try to keep paying on their mortgage even after they’ve fallen behind on other accounts.
  • Strategic defaults are heavily concentrated in negative-equity markets where home values zoomed during the boom and have cratered since 2006. In California last year, the number of strategic defaults was 68 times higher than it was in 2005. In Florida it was 46 times higher. In most other parts of the country, defaults were about nine times higher in 2008 than in 2005.
  • Homeowners with large mortgage balances generally are more likely to pull the plug than those with lower balances.
  • People who default strategically and lose their houses appear to understand the consequences of what they’re doing.

Those set of facts may at first glance be counterintuitive, if not shocking, but if one explores the psychology of the situation, one finds it is quite logical.

Psychology of the Subprime Strategic Default

The only "asset" many subprime borrowers have is their home. Although that asset has negative value, the homeowner may have nowhere else to go, especially if they have to put up a month’s rent plus a 1-2 month security deposit in


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Phil's Favorites

Don't be fooled by fake images and videos online

 

Don't be fooled by fake images and videos online

Nope, not a real news report from Hurricane Irma. Snopes

Courtesy of Hany Farid, Dartmouth College

One month before the 2016 U.S. presidential election, an “Access Hollywood” recording of Donald Trump was released in which he was heard lewdly talking about women. The then-candidate and his campaign apologized and dismissed the remarks as harmless.

At the time, the authenticity of the recording was never questioned. Just two years later, the public finds itself in a dramatically different landscape in terms of believin...



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Zero Hedge

Why Today's Fed's Minutes Release May Result In Brief Market Chaos

Courtesy of ZeroHedge. View original post here.

Traditionally, when the Fed releases the Minutes for its most recent FOMC meeting, the sequence of events is that Bloomberg, Reuters and a handful of other news service blast flashing red headlines with the key highlights and soundbites, which are delivered to markets precisely at 2:00pm which then sets the market mood for the rest of the day, allowing algos to trade in kneejerk response to the initial information disclosure, and forcing analysts and strategists to goalseek their narrative to the market's reaction: if stocks spike, the minutes are more dovish than expect, conversely if...



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Kimble Charting Solutions

Are Bank Stocks Ready to Right-Side the Bull Market?

Courtesy of Chris Kimble.

The bank sector is a good indicator of the health of the broader stock market.

Bulls like to see the banks in a leadership role because it indicates that the economy is doing well. But when they begin to lose momentum and underperform, it often leads to pullbacks and corrections.

As you can see in today’s chart, the Bank Index (BKX) began to stumble well before the recent correction. And that bearish divergence was a warning to market bulls – similar to the 2015-2016 setup.

On the other hand, the recent rally has given bulls an opportunity to right-side th...



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ValueWalk

Whitney Tilson Likes Activision Blizzard On Fortnite Mania

By Jacob Wolinsky. Originally published at ValueWalk.

Whitney Tilson‘s email to investors discussing Activision; Snapchat; TradeStops; and hiring writer or editor .

1) I’m going to start sending out short blurbs on stocks that are on my radar screen that I think are interesting enough to do a second round of research. To be clear: these are NOT stocks I own or am recommending – just ones that pass my initial five-minute screen (which few do these days!) that I’m doing some more work on. That means reading the latest quarterly earnings and annual report, investor presentation, any write-ups on ValueInvestorsClub, SumZero or Seeking ...



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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

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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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Insider Scoop

The Street's Early Reaction To Walmart's Q4 Beat

Courtesy of Benzinga.

Related WMT Mid-Morning Market Update: Markets Edge Higher; Walmart Tops Q4 Expectations Walmart Brings Bright Spot T...

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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.

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.

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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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