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As H P C Starts To Pick Up Speed Banks Are Getting Worried

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Sub-Prime Lenders' Shares Fall

Purveyors of risky home loans are hit by fears of a cooling housing market and higher default rates.
By E. Scott Reckard, Time Staff Writer
August 26, 2006
Investors bailed out of stocks of mortgage companies catering to high-risk borrowers Friday, a day after an Irvine lender reported higher default rates.
Some analysts say the selling wave could foreshadow more trouble for the industry.

Those exact same lenders started the same madness over here recently as more people were priced out of borrowing from conventional sources. The shylock rates these people charge the sheeple are going to backfire and no one will shed a tear.

The bubbles in OZ, US, Spain and here are on their last legs. It will not be long now.

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Get a load of this, backfire indeed, all the way along the chain.


High default rates don’t faze investors in piggyback loans

August 7, 2006

When home mortgage borrowers borrow in order to make the down payment, using the same collateral as the main mortgage, it’s called a “piggyback loan.” This might seem to be risky for the lender—and it is—but when the second-lien loan is packaged into a bond, there are plenty of people on Wall Street willing to bear the risk.

Such second-lien mortgage loans have not been neglected by money managers and pension funds, some of whom have already been buying bonds comprising "subprime" mortgage loans.

Exotic mortgages, like interest-only loans, have made it possible for more people to “own” their own homes, but with a down payment—typically 10% to 20%—made from the proceeds of another loan, they begin occupancy without any equity in the property.

Some borrowers who take out a second loan that puts a second lien against their home do so because two smaller loans can be cheaper than one large one.

Many of the second-lien loans wind up at commercial banks, and as their numbers mount, they’re being collected—sometimes along with subprime loans—into bonds and sold on the secondary mortgage market. Some of these bonds are made up entirely of second-lien mortgages.

The following is a sampling of financial firms selling bonds backed only by second-lien loans:

· Countrywide Financial

· First Franklin – (National City Corp.)

· Irwin Financial

· Residential Funding – (General Motors’ financial)

· Several Wall Street firms

Edited by OnlyMe

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The financials have been particularly weak for some time now. Not surprised that these lenders are getting hammered. From what I gather, even the sub prime lenders are tightening their lending criteria.


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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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