The bank failure rate slowed a bit last week, but the tally remains alarming. Two banks in Georgia and one in Florida hit the skids, bringing the 2010 total to 40.

The victims this time around were McIntosh Commercial Bank in Carrollton, Georgia, Unity National Bank in Cartersville, Georgia, and West Bank of Key West, Florida. Together the three bank failures are expected to cost the FDIC insurance fund approximately $213.6 million.

Continue reading Three More Banks Fail

Three More Banks Fail originally appeared on BloggingStocks on Mon, 29 Mar 2010 09:30:00 EST. Please see our terms for use of feeds.

Just to give you an example, David Rapport, professor at the University of California Medical School had to pay $3500.00 up front to refinance his mortgage. A year ago, there was no fee! So banks are jumping in the refinancing market and charging outrageous fees just for writing a mortgage. Don't tell me that last year there was no fee and now for some magical reason banks have to charge sky high fees. The mortgage Bankers Association boosted its forecast for 2009 home loan originations by $800 billion to $2.78 trillion. This will give you a sense of the size of the market.

Continue reading Banks should lower mortgage rates and origination fees

Banks should lower mortgage rates and origination fees originally appeared on BloggingStocks on Wed, 25 Mar 2009 14:10:00 EST. Please see our terms for use of feeds.

Countrywide fined $325,000 for ripping off consumers originally appeared on BloggingStocks on Wed, 16 Jul 2008 10:35:00 EST. Please see our terms for use of feeds.

After hitting a one-year high of $70.57 in August, the stock hit a one-year low of $26.38 in November. This morning, FNM opened at $28.53. So far today the stock has hit a low of $28.05 and a high of $28.99. As of 11:00, FNM is trading at $28.80, down $0.18 (-0.6%). The chart for FNM looks bullish but deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in four months as long as FNM is below $45 at June expiration. Fannie Mae would have to rise by more than 57% before we would start to lose money.

Continue reading Fannie Mae (FNM) lower as mortgage applications decline

Fannie Mae (FNM) lower as mortgage applications decline originally appeared on BloggingStocks on Wed, 20 Feb 2008 12:52:00 EST. Please see our terms for use of feeds.

The subprime mortgage mess took yet another victim as Bear Steams (NYSE: BSC) reported its first loss as a public company when it was forced to write down $1.9 billion dollars in investments related to subprime mortgages, according to Bloomberg. Analysts expected a much lighter hit. This loss is $1.2 billion more in write-downs than predicted.

Bear Steams also was hit harder than its chief rivals Citigroup (NYSE: C), Morgan Stanley (NYSE: MS) and Merrill Lynch (NYSE: MER) on the trading side so overall revenue for the fourth quarter resulted in a net loss of $854 million or $6.91 per share. A year earlier fourth quarter results were a net income of $563 million, or $4 per share. Bear Stearns is the second-largest underwriter of U.S. mortgage bonds and it paid dearly for that lead role.

Bloomberg said the firm underwrote $7.3 billion of U.S. bonds, which was 17% less than last year and it managed just $1.18 billion in equity offerings, a 28% decrease. Yet Sanford Bernstein analyst Brad Hintz does see a rainbow at the end of this cloud. He told Bloomberg that he believes that we're heading into a recession and that's when traditional investment banking activities, such as mergers and acquisitions slow, while cuts in interest rates can help Bear's bond business. So Bear could benefit from the recession that's now looking more and more likely.

Since the loss was much greater than anyone predicted, expect the stock to fall today, but early trading made the stock price look like a yo-yo going up and down.

Bear Stearns falls into subprime trap originally appeared on BloggingStocks on Thu, 20 Dec 2007 09:28:00 EST. Please see our terms for use of feeds.

Be afraid, be very, very afraid. According to a piece from Marketwatch, subprime is -- to borrow a line from Monty Python -- not dead ... it's just sleeping. And when the subprime players come back, they will just look different. Maybe they'll be more responsible, less predatory, and easier to understand -- but maybe not.

According to some experts, the reason that subprime mortgages will return is that our country is dedicated to the idea of increasing home ownership. And the only real way to increase home ownership is to give mortgages to people who wouldn't traditionally qualify for them.

Perhaps it's a policy that needs some rethinking. As we watch record numbers of Americans struggling with increasing mortgage payments, we have to wonder whether they can keep their homes. There's something to keep in mind: A lot of these people would have been a lot better had they continued renting for now, and our national fixation on the idea of home ownership is a big part of what got them into this problem.

Don't get me wrong: I think home ownership is a wonderful thing, and absolutely something that should be encouraged. But in our religious zeal for creating the ownership society, we've forgotten something: If you can't afford a home, you're better off renting. The fact is that a lot of people bought homes who had no business doing that, and that's a big part of why we're in the crisis we find ourselves in now.

The second coming of subprime? originally appeared on BloggingStocks on Sun, 21 Oct 2007 14:10:00 EST. Please see our terms for use of feeds.