Toxic assets of 4 trillion want do it part 2

This depression will bring job losses towards 20% over time and we have 40% failure rate at Subprime at 8.6% so its easy to imply that they unfortunately all will fail over the next 2 years.

Posted By: Diana Olick I said it yesterday, and I’ll say it every day: Until the number of foreclosures in this country starts to go down instead of up, we will not see a full recovery in the housing market; I don’t care how upbeat you are about buyer traffic this spring. A new report out today shows foreclosures continue to rise. Equifax, a well-respected credit bureau, found that 7% of homeowners with mortgages that were at least 30 days late on their payments in February, that’s up 50% from a year ago. And close to 40% of subprime borrowers are late, up from 23.7% a year ago. Then I get an email from mortgage guru Mark Hansen of the Field Check Group, who tells me that foreclosures are about to soar in California near-term: For months prior to March, banks/servicers were on and off of foreclosure moratoria with many on a complete hold awaiting Pres. Obama’s plan to save the housing market and homeowners. We track each foreclosure start through the entire foreclosure process individually and in aggregate – also by originator and servicer – and as soon as the Obama plan was made known, banks/servicer shifted their Notice-of-Default and Notice-of-Trustee Sale machines into overdrive. Foreclosure start (NOD) and Trustee Sale (NTS) notices are going out at levels not seen since mid 2008. Once an NTS goes out, the property is taken to the courthouse and auctioned within 21-45 days. On top of that, my colleague Jane Wells is out in the foreclosure capital of the world today, Stockton, CA, and while she reports good news that houses there are finally selling, the bad news, she says is that more and more as major lenders seek out troubled borrowers for modifications, that find, “the people are gone. Even if they’ve not been foreclosed on yet!” Not good. With job numbers getting worse, more and more borrowers are going to end up missing payments, and no matter how much the banks and the Obama administration would like to help these folks, you can’t modify a loan down to a zero monthly payment.

The fact that the Treasury delays the stress test results does sound strange to me as they could present all facts now as now companies report for a few days except AA and the long WE ahead to digest it. Holding back information is market manipulation and I am sure some people are ahead in the news anyway as usual. If the news is so bad holding it back will not change the reaction of the markets that’s the bias I have now about the results. If they are done prudently the results cannot be good anyway as the banks still carry unbearable risks except for Goldman ( you can be sure of the Goldman result as are the buyers) – Blankfein’s statement today was a display of strength although he tried to be reasonable as a political attitude in a PR sense.

Excerpt 2

The U.S. Treasury Department is planning to delay the release of any completed bank stress test results until after the first-quarter earnings season to avoid complicating stock market reaction, a source familiar with Treasury’s discussions said Tuesday. The Treasury is still talking about how results of the regulatory stress tests on the 19 largest U.S. banks will be released, and may disclose them as summary results that are not institution-specific, the source said. The government is testing how the largest banks would fare under more adverse economic conditions than are expected in an attempt to assess the firms’ capital needs. The tests are due to be completed by the end of April, but Treasury has said they may be finished before then. The source, speaking anonymously because the Treasury has not made a final decision on what to disclose, said officials do not want any test results released before the earnings season wraps up for most U.S. banks on April 24. Treasury did not immediately respond to a request for comment. U.S. regulators have reached the closing phase of the stress tests, with many of the top banks having already turned in their internal versions of the test to officials. Bank of America [BAC 7.44 -0.04 (-0.53%) ] Chief Executive Kenneth Lewis said last Thursday that his bank has already completed its test. Bank regulators are at the stage of reconciling their own versions of the results with the banks’ internal assessments.

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~ by behindthematrix on April 9, 2009.

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