04.17.2007 - Tuesday Open Thread
This is your open thread for Tuesday, April 17, 2007. You may post random links and off-topic discussions here.
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13 comments:
Psssst! It's National Support Your Government Day, so e-file your funds by tonight!
[I just e-filed our return, a whopping 23.5 hours before the deadline--don't know why I always put it off until the last day but I seem to function better under pressure]
Local neighborhood update--the $1.1M FSBO flip down the street from me has been on the market now for one month (bought 7/06 for $999,450). I believe that the flipper is living there now--drove by tonight and they have sheets and blankets over the upstairs windows (nothing says cash-strapped flipper better than that!!!).
So can we no longer use our Blogger accounts to post? Mine no longer seems to work, and I have to use my Google account.
Not sure if this was posted earlier...
Heebner Says Home Prices May Fall 20% Amid Bad Loans
http://tinyurl.com/3yyf3l
This was in San Diego's UT talking about the forclosures..."As bleak as the numbers for San Diego looked, Karevoll said the area's default and foreclosure problems are mild in comparison to cities such as Detroit and Cleveland, where prices did not rise so high and so fast."
So is he saying that those areas that did not have as high increases in San Diego are more at risk for foreclosures? Hmmm... and then they quote..."In a similar report, Foreclosures.com said what it termed a “foreclosure nightmare” is at hand nationally."
Ya Think?
The obvious has just been made obvious to the general populace:
http://seattletimes.nwsource.com/html/businesstechnology/2003669134_wamusubprime17.html
WaMu won't escape subprime turmoil
More anecdotal evidence that things, they be a changing:
I talked to an acquaintance that I haven’t seen for awhile last nite. He works in construction for a small company that builds high-end ($400K to $750k) homes in Kitsap County. Apparently they have been doing very well for the last few years – up to now. He said that they are having difficulty finding buyers for the last five homes that they built ($500K to $650K). He said that the situation is getting a little uncomfortable now because the unsold inventory is costing about $12,000 a month in interest.
Like eleua mentioned in another post, the combination of tightened lending standards and a subsiding flow of SoCal equity transplants are going to have a significant effect on the real estate market in the PNW. I believe my acquaintance is experiencing the beginnings of that change right now.
As a semi-interesting side story, I have another acquaintance who lives in a neighborhood where two houses were built by the company my other acquaintance works for. Out of curiosity he investigated these houses and learned that both of them sold a few months ago at over $600K with zero down financing. Zero down on a $600K house …….
This article contains a really good breakdown of the bubble on a national level, mortgage overhang, etc. Well worth the 10 minutes to read it.
Says the author resides in Washington State - perhaps you are active here? If so, nice work.
Mortgage giants may help borrowers
http://tinyurl.com/2ab72c
WAMU - There was a high volume of Put-Options on them over the past several weeks...looks like they were wrong, as the stock went up after hours!
WaMu had a much better quarter than estimated, especially with the larger than avg risk for their mortgages. There is a great WSJ article about them today that breaks it all down. One reason is that they diversified themselves this past year and have a new kick-ass origination system that just came out in the fall (as I helped work on it).
I have a discussion with a co-worker today, they are looking to buy a house in west seattle and would most likely use 100% financing! I told her they should wait, but she gave me the usual "price out forever" bs and said she'll be glad two years from now and I will regret. No wonder the price in Seattle never goes down! Time will tell if she's right.
To the blogger formerly known as 'Financeguru,'
Just some excerpts from the very first article posted under WM in the Yahoo Headlines...
Washington Mutual Inc. reported a 20 percent slide in its first-quarter earnings Tuesday, citing a nationwide implosion of the subprime home loan market. Even so, the company beat Wall Street estimates, and its stock rose in after-hours trading.
20% slide in 1Q earnings? This is good? Keep in mind that the "nationwide implosion of the subprime home loan market" happened in early March. What will WM's numbers look like when they get April, May, and June's numbers?
Kerry Killinger, Washington Mutual's chairman and chief executive, said the company's retail banking, card services and commercial groups fared well, while its home loan business -- particularly the subprime segment for consumers with high-risk credit histories -- has taken a serious hit.
Again, wait until the 2Q numbers hit. How will those other segments fare when the consumer is turtling? My guess is 'not well.'
The nation's largest savings and loan said its net income was $784 million, or 86 cents a share, for the three months ended March 31, down from $985 million, or 98 cents per share, in the same period a year ago.
Hmmm...net income is dropping while risk exposure is rising...
Washington Mutual's home loans group posted a first-quarter loss of $113 million compared with a $52 million profit during the year-ago period. The company suffered a quarterly loss of $164 million on sales of subprime mortgages, which overshadowed improvements in home loans to consumers with better credit.
Subprime risk outweighs reward from A paper. Sounds like a company I want to own - NOT!
Killinger said he's seeing signs that the subprime market is improving. "I've seen pricing improving recently. We've also seen credit underwriting improving, and we've seen performance of 2007-originated loans improving over what was done in 2006," Killinger told The Associated Press.
Ahh, yes...the ever-popular "things just got better in the ten minutes prior to the conference call so we will extrapolate that into the future" excuse. WTF? Honestly, W-T-F? We are 107 days into 2007. Assuming WM wrote a bunch of mortgages during the first week in January, the Lumps that pay on them have had to make, at the most, 3 f-ing payments!!! HOW DUMB ARE THE SHAREHOLDERS AT WM?
Yesterday, I came downstairs and found my 8yo brushing his teeth (at 630am), with chocolate all over his face and a bag of Nestle chips open on the counter. His coverstory was better than Killinger's.
Killinger said he expects the home loan unit to return to profitability later this year, and he sounded upbeat about the company's larger divisions.
Idiot.
Like I have been saying for 4 years...It appears that airline executives have all become bankers.
You want to buy this pig? Please do. Take out a 3rd HELOC from WaMu to pay for it. Buy on margin. Write naked puts.
WAMU - There was a high volume of Put-Options on them over the past several weeks...looks like they were wrong, as the stock went up after hours!
Wrong!
Options are a zero-sum game. In order for someone to win, someone else has to lose.
Massive put writing on kinky stocks has been a huge moneymaker for many on Wall Street since the advent of the "Greenspan Put."
In order for there to be a buyer, there has to be a seller.
Back in the NAZ implosion, it was very common for stocks to have their "come to Jesus" event in the week after option expiration. Gateway 2000 had their execs all spin a great story during option expiration week, only to see it crater the following week.
No SEC investigation there...nope! Nothing to see there. They were after some icy home improvement CEO who traded on a biotech whisper. Nevermind all the massive fraud and money grabs by all the true insiders on Wall Street.
Agent Barbrady of the SEC was on the job! Just like he is with Sally Mae, Fannie, Freddie, and Dell.
I need to go to bed. In the past 24 hours, my hockey team is down 3 games to 1. My 8yo just generated an $3K orthodontic bill. Intel left a floater that everyone gobbled up and asked for more. WM is run by idiots, for idiots. I spent the entire weekend doing paperwork for Uncle Sugar. The execs at my company are screaming how percarious our financial situation is, and are rewarding themselves with $170MM. Mrs. E decided to use our camera and a concrete floor to op-check the gravitational field in Silverdale (still working at 9.81 m/s^2).
Have you ever had one of those days?
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