Fannie Mae's quarterly loss shrunk to $1.2 billion. But even as signs point the pressures on Fannie may be easing, it still asked the government for an additional $1.5 billion cash infusion. Fannie Mae and Freddie Mac insured nine of ten new loans in the first quarter.

Fannie Mae's story is the story of the housing debacle. Fannie Mae, and its companion Freddie Mac, are used to insure home mortgages backed by the U.S. government. During the heyday of the housing bubble, Fannie and Freddie ended up guaranteeing risky mortgages. When the subprime mortgage crisis hit, Fannie and Freddie came close to collapsing. The federal government took them over under a process called conservatorship.

Continue reading Fannie Mae Posts Smallest Quarterly Loss Since 2007

Fannie Mae Posts Smallest Quarterly Loss Since 2007 originally appeared on BloggingStocks on Fri, 06 Aug 2010 11:00:00 EST. Please see our terms for use of feeds.

The job market shifted in 2009 from the heaviest cuts in almost a decade to one in which signs of recovery were, though limited, struggling to be seen. It isn't turning around yet, and unemployment could still go higher, but it seems that the worst is behind us.

According to Challenger, Gray & Christmas, the job market should come around in 2010, as job creation finally pulls ahead of job losses. Increased hiring, which is expected to gain momentum next year, may take a while to move the needle on unemployment, though, since there are millions of people who have been out of work so long that they are no longer counted as unemployed for the official number that now sits at 10%.

Continue reading Job Market on the Mend, but Wait for 2011

Job Market on the Mend, but Wait for 2011 originally appeared on BloggingStocks on Wed, 23 Dec 2009 13:00:00 EST. Please see our terms for use of feeds.

The loans that got us into this mess were generally the first to fall. Variable rate mortgages written without documentation for people with sketchy credit histories shocked nobody as their slide became an avalanche. But, the good stuff is starting to follow. An increasing amount of fixed rate mortgages offered to borrowers with solid credit histories are feeling their ways to foreclosure. Blame unemployment for this one. When people can't work, it gets pretty hard to pay the mortgage.

Fixed rate, high quality mortgages had a foreclosure a year ago. Last quarter, it jumped to 33%, according to a Mortgage Bankers Association report. As this happened, the amount of homeowners behind on their payments or in foreclosure just set another record high ... for the ninth month in a row. Subprime mortgages are headed in the other direction. Low quality adjustable rate mortgages are now 16% of new foreclosures -- compared to 35% last year. And, more than 18% of Federal Housing Administration loans are anywhere from one payment behind to in foreclosure, with California, Nevada, Arizona and Florida worst off: together, they accounted for 44% of new foreclosures.

Continue reading Even the good die young? High-quality mortgages approaching foreclosure

Even the good die young? High-quality mortgages approaching foreclosure originally appeared on BloggingStocks on Fri, 20 Nov 2009 14:30:00 EST. Please see our terms for use of feeds.

Deutsche Bank (NYSE: DB) expects almost half of all U.S. homeowners to be underwater -- figuratively, of course -- by 2011.

Declines in home prices and the fact that some of those difficult mortgages just aren't going away put 26% of homeowners in this situation by the end of last March, and it seems the situation is only going to get worse. Unlike the early stages of the credit crisis, which were driven by subprime mortgages, the next iteration will have a greater effect on prime mortgage borrowers, which comprise two-thirds of the loans outstanding.

Continue reading Half of all mortgages to be underwater by 2011

Half of all mortgages to be underwater by 2011 originally appeared on BloggingStocks on Thu, 06 Aug 2009 12:00:00 EST. Please see our terms for use of feeds.

KeyCorp (NYSE: KEY) stepped into the earnings spotlight this morning, announcing that its second-quarter loss checked in at 69 cents per share (68 cents per share excluding charges). A year ago, the bank lost $2.71 per share in the second quarter. Although the results were better than those from a year ago, they were not better than the consensus estimate, which called for a loss of 41 cents per share.

The company also announced that it was cutting the amount of preferred shares that it plans to exchange by 71%. KeyCorp's CEO (Henry Meyer III) stated that the company's results "reflect the weak economic environment and the steps that it has taken to address issues in credit quality, strengthen capital and control costs." Like many regional banks, KeyCorp suffered thanks to the credit crunch; even though the bank was not a major player in the subprime-mortgage fiasco. The company added that loan-loss provisions were $850 million, which was 31% greater than a year ago.

Continue reading KeyCorp's quarterly loss is more than the Street expected

KeyCorp's quarterly loss is more than the Street expected originally appeared on BloggingStocks on Wed, 22 Jul 2009 13:30:00 EST. Please see our terms for use of feeds.

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.

This post is part of our feature on Money Winners of 2008. See all 20.

Lots of people thought real estate was overpriced. Many worried that banks were giving out mortgages too cheap. But what did you do about it? (Either to help the situation or to make money.) Jeff Greene, a real estate mogul in California, actually found a way to bet against the subprime mortgage folly. He made $450 million -- at least that was the count earlier this year.

Well, he didn't just think of it on his own. He basically took the idea that his friend, hedge fund manager John Paulson, had. Paulson thought that, as an individual, Greene wouldn't be able to do this complex a transaction. According to the Wall Street Journal he even used special software so investors in a hedge fund Paulson created just to exploit the subprime crisis couldn't pass on his strategy.

How Greene and Paulson made money involves two financial terms you've probably had to learn this year and never want to hear again. Collateralized debt obligations (CDOs) are the way mortgages are packaged and sold to investors in various slices of risk. Credit default swaps are the holders of those investments insured themselves -- by buying what was like unregulated insurance from one another. The credit default swaps are what got so many big companies in trouble -- they had to pay up on investments that went bad. So Paulson shorted CDOs and bought some credit default swaps.

Continue reading Money winners of 2008: Jeff Greene shorted subprime

Money winners of 2008: Jeff Greene shorted subprime originally appeared on BloggingStocks on Mon, 15 Dec 2008 12:42:00 EST. Please see our terms for use of feeds.

Continue reading Abandoned McMansions continue to litter suburbia

Abandoned McMansions continue to litter suburbia originally appeared on BloggingStocks on Wed, 10 Dec 2008 10:03:00 EST. Please see our terms for use of feeds.

Continue reading Greenspan: I was wrong about banks' ability to police each other

Greenspan: I was wrong about banks' ability to police each other originally appeared on BloggingStocks on Thu, 23 Oct 2008 15:19:00 EST. Please see our terms for use of feeds.

Continue reading Dodd says Fed has the authority to establish new 'debt fund'

Dodd says Fed has the authority to establish new 'debt fund' originally appeared on BloggingStocks on Thu, 18 Sep 2008 11:11:00 EST. Please see our terms for use of feeds.

Why is the government helping companies who sold mortgages to people who they knew couldn't afford them and repackaged the loans into securities that were unloaded on unsuspecting investors -- but doing little for individual homeowners?

Continue reading Where is the government bailout for homeowners?

Where is the government bailout for homeowners? originally appeared on BloggingStocks on Wed, 17 Sep 2008 12:05:00 EST. Please see our terms for use of feeds.

It's been over a year since I last posted on liar loans -- these are mortgages which the borrower obtains despite offering no documentation on their income, employment or assets. These liar loans were also known as Ninja loans -- which is short for no income, no job, and no assets. The Associated Press reports that such liar loans will add $100 billion to the losses our economy is already suffering thanks to $400 billion worth of losses from subprime mortgages.

The problem we face as an economy is that it's hard to see where the liar loans end and the collateralized debt obligations (CDOs) and other asset-backed securities begin. In a sense, they are all liar loans. In the case of the mortgages, borrowers created paperwork that was inconsistent with their actual financial condition so they could get the money. In the case of CDOs, the issuing investment bank bought a AAA rating from a rating agency which created the illusion that the security was safe. Conceptually, there is little difference -- both depended on essentially forged paperwork to make the loan go through.

Why did banks issue liar loans? They were afraid to lose market share. But that doesn't make it right. As my mother used to say to me, if the other kids jumped off the Empire State Building, would you do it too? AP brings this to life in an interview with David Zugheri, co-founder of Texas-based lender First Houston Mortgage who said, "Everybody drank the Kool-Aid. They knew if they didn't give the borrower the loan they wanted, the borrower could go down the street and get that loan somewhere else.''

Continue reading Liar loans to add $100 billion in losses to subprime's $400 billion

Liar loans to add $100 billion in losses to subprime's $400 billion originally appeared on BloggingStocks on Mon, 18 Aug 2008 20:18:00 EST. Please see our terms for use of feeds.

Bloomberg News reports that banks' subprime write-downs have hit $500 billion. The last time I checked, that figure was $400 billion. Bloomberg reports that New York University economist Nouriel Roubini forecasts such losses will ultimately total $2 trillion. I wonder if he would revise his estimate upwards.

Recently banks have been taking write-downs for their Auction Rate Securities (ARS). Bloomberg reports about $1.9 billion has been set aside so far to cover ARS losses. It notes that UBS AG (NYSE: UBS) set aside $900 million to cover potential losses and Citigroup, Inc. (NYSE: C) and Wachovia (NYSE: WB) each estimate that their ARS buybacks will cost $500 million.

Write-downs have been going hand in hand with capital raising. But banks and brokers have not been able to raise enough capital to offset the losses. Bloomberg calculates that they've raised "$353 billion of capital to cope with the write-downs. The gap between the losses and capital infusions, which stands at $148 billion, has regularly narrowed to about $80 billion as capital raising follows write-down announcements."

Can banks and brokerages raise another $1.7 trillion to keep up with the write-downs that Roubini forecasts? I sincerely doubt it.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup stock and has no financial interest in the other securities mentioned.

Subprime write-downs total $500 billion -- just $1.5 trillion to go originally appeared on BloggingStocks on Tue, 12 Aug 2008 16:46:00 EST. Please see our terms for use of feeds.

Continue reading BNP Paribas, which signaled credit crunch, is now France's healthiest bank

BNP Paribas, which signaled credit crunch, is now France's healthiest bank originally appeared on BloggingStocks on Mon, 04 Aug 2008 12:15:00 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.

The Washington Times reports that Phil Gramm, UBS AG (NYSE: UBS) vice chairman and senior economic advisor to John McCain (R.-AZ), thinks we're a nation of whiners. Gramm's UBS is a leader on three important fronts in the effort to destroy the U.S. economy: the $1.3 trillion subprime mortgage catastrophe, the $330 billion Auction Rate Securities (ARS) freeze, and a tax evasion scheme of unknown magnitude.

The Washington Times quotes Gramm as saying: "We have sort of become a nation of whiners. You just hear this constant whining." UBS probably pays Gramm well for his services so I can see where he's coming from. He is making money and he's the only one who matters. But if you think he is helping McCain, think about these things:

Continue reading UBS exec and McCain advisor Phil Gramm: U.S. is 'nation of whiners'

UBS exec and McCain advisor Phil Gramm: U.S. is 'nation of whiners' originally appeared on BloggingStocks on Thu, 10 Jul 2008 19:21:00 EST. Please see our terms for use of feeds.

H&R Block (NYSE: HRB), whose colleagues include Intuit (NASDAQ: INTU) and Jackson Hewitt (NYSE: JTX), reported Q4 and full-year earnings on Monday. The numbers looked pretty good to me. For Q4, revenues increased 11% to $2.6 billion and earnings per diluted share from continuing operations increased 17% to $2.11. According to this article, analysts' expectations were beat by $0.08. For the full year, the top line expanded by 10%, coming in at $4.4 billion. Earnings per diluted share from continuing operations jumped 21% to $1.39.

The tax specialist said it worked with 23.5 million clients, the most ever in its corporate history. That's a nice indication of health for the company, I suppose, but here's a better one. The board decided to juice the dividend. The annual payment will now be $0.60 per share, translating to a 5% increase. Okay, 5% isn't too exciting, I'll grant you, but H&R Block has now increased its payments to shareholders every year for over a decade.

But, as the company stated in its release, although it intends on repurchasing shares over the next few years, it will remain "particularly disciplined" about the subject in the next fiscal year. Essentially, that means shareholders should not expect a lot of share repurchases for a while. H&R Block is reacting to the fact that it is still rebooting itself after being victimized by the subprime mortgage crisis. I'd rather hear a more aggressive stance in terms of buyback plans, but I'd say there is prudent motive in such posture given the company's state.

Continue reading H&R Block rocks expectations for its fourth quarter

H&R Block rocks expectations for its fourth quarter originally appeared on BloggingStocks on Tue, 01 Jul 2008 12:55:00 EST. Please see our terms for use of feeds.

More people are homeless as more homes stand empty originally appeared on BloggingStocks on Thu, 26 Jun 2008 18:00:00 EST. Please see our terms for use of feeds.

Angelo Mozilo's nine lives may be about to run out. So far the CEO of Countrywide (NYSE:CFC) has avoided the most severe taint from the collapse of his mortgage company and its questionable practices.

The State of Illinois, the land of Lincoln, will bring civil charges against Mozilo and the firm he started. According to The Wall Street Journal, In a draft of the complaint, Illinois alleges that the company engaged in "unfair and deceptive practices" in the sale of mortgage loans.

One of the main pieces of the complaint is that mortgage brokers pushed loans on people, even it they could not afford them.

Of course, as is always true with charges bought by attorneys general, there is some politics behind the claim. There have been a number of Countrywide foreclosures in the Illinois.

To some extent the politics do not matter. Based on other investigations of Countrywide, it appears that management did quietly push its people to move loans out like cars off an assembly line.

What is most troubling is that no one in government anywhere caught onto the practice earlier.

Douglas A. McIntyre is an editor at 247wallst.com.

Illinois goes after Countrywide (CFC) and CEO Angelo Mozilo originally appeared on BloggingStocks on Wed, 25 Jun 2008 08:35:00 EST. Please see our terms for use of feeds.

Barclays (NYSE:BCS) become the most recent bank to raise billions of dollars, bring in $8.8 billion from investors including the sovereign funds in Qatar and Singapore.

"Through our capital raising ... we strengthen our capital base and give ourselves additional resources to pursue our strategy of growth through earnings diversification," Barclays Chief Executive John Varley said, according to The Wall Street Journal.

That is a nice way to say the bank was running out of money.

The news says more about the future than it does the past. A bank as large as Barclays would not raise such a large sum if it believed the credit crisis was largely over. The firm clearly expects more fall-out from mortgage-related paper and LBO loans. Why else dilute the shareholders?

At least the fact that large funds will still put money into banks is good news.

If the tea leaves from the bank's actions are correct, the opinion among many Wall Street analysts that the financial crisis will extend into next year is right.

Douglas A. McIntyre is an editor at 247wallst.com.

As Barclays (BCS) raises nearly $9 billion, where does it end originally appeared on BloggingStocks on Wed, 25 Jun 2008 04:14:00 EST. Please see our terms for use of feeds.