Subprime mortgage defaults peaked and will slowly begin to slide during the next two years.

But don't get excited -- option ARMs and ALT-A mortgages are now beginning to rise at a very rapid rate. According to analysts I follow, notably Ivy Zelman, the next tsunami will be larger than the one we just went through.

And the banks are not currently valuing these mortgages as if they will default at this rate.

Be sure to read all 7 reasons the stock market isn't going up any time soon.

Michael Shulman is a contributor to OptionsZone.com.

Seven reasons the market is not going up any time soon: #2 The next mortgage tsunami originally appeared on BloggingStocks on Mon, 26 Jan 2009 11:33:00 EST. Please see our terms for use of feeds.

Continue reading Closing Bell: Profit taking inside a tornado

Closing Bell: Profit taking inside a tornado originally appeared on BloggingStocks on Thu, 24 Jul 2008 16:14:00 EST. Please see our terms for use of feeds.

Washington Mutual loses $3.3 billion in second quarter originally appeared on BloggingStocks on Thu, 24 Jul 2008 10:44:00 EST. Please see our terms for use of feeds.

Oh man, the news coming from the Fed seems to get worse and worse. On a day when financials like Citigroup (NYSE: C) continue to weaken -- Merrill Lynch (NYSE: MER) reduced Citi's outlook -- Fed head Ben Bernanke sends the market indication that we are not yet near the end of the mortgage debacle, and he is looking for a "vigorous response" to address it.

According to an AP article, Bernanke, in an address to a banking group, stated that the mortgage crisis was not done, and that more relief would be necessary for homeowners who simply are unable to balance their books. This isn't what anyone on Wall Street wanted to hear, and certainly not what an individual investor like myself was looking for, either; I have ample financial exposure in the form of MFA Mortgage (NYSE: MFA) and Newcastle Investment Corp. (NYSE: NCT).

Further, Bernanke made a suggestion that bankers would obviously find tough to implement -- he said that a reduction in loan principal might be an appropriate way to relieve a struggling owner of real estate. Hmmm, that might not go over too well, especially with the crowd that isn't happy with government intervention -- now Bernanke is calling for lenders to be more lenient? But, what should one expect? This is the Fed, after all, and it's the institution's job to promote some economic homeostasis in times of need. Bernanke believes more foreclosures are coming, and he wants to get ideas out there that will save as much home equity as possible. He brings up a good point, implying that lenders will benefit from loan-principal reductions simply because the rate of foreclosures would, in theory, decline as a result of such a tactic.

Continue reading Bernanke delivers more bad news, wants 'vigorous response' to crisis

Bernanke delivers more bad news, wants 'vigorous response' to crisis originally appeared on BloggingStocks on Tue, 04 Mar 2008 15:23:00 EST. Please see our terms for use of feeds.

We have been talking a lot about the weak housing market lately, and this morning we get another sign of just how bad things are with luxury home builder Toll Brothers (NYSE: TOL) warning it will see a huge decrease in its quarterly revenues.

The Pennsylvania-based home builder has not yet released official numbers, but will be hosting a quarterly outlook conference call today at 2:00 PM EDT about the fiscal third quarter ended July 31.

The company, which reports earnings August 22, expects revenue to fall 21 percent to about $1.21 billion based on preliminary estimates. Toll also said it wasn't comfortable giving earnings guidance.

This can't be a good sign.

Not only is the company preparing investors for a weak fiscal third quarter, it also is setting the stage for more weakness in future quarters. In this morning's announcement, Chief Executive Robert Toll said that uncertainties in the mortgage market right now could continue to lower the pace of home sales moving forward.

Surprisingly, the stock is trading higher in pre-market trading, but I would not be surprised to see this reverse once the market opens up and Wall Street's big boys get into the action.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

Toll Brothers (TOL) warning puts more pressure on home builders originally appeared on BloggingStocks on Wed, 08 Aug 2007 09:50:00 EST. Please see our terms for use of feeds.