Upside Down Mortgage

Archive for May, 2009

Housing Bubble In Us

Question: Do you believe the US will ever really go back to capitalism where companies go out of business if they fail?

In real capitalism, one weighs the risk versus the reward and if a company makes bad decisions and fail, they go out of business. Unfortunately, the US government and the Federal Reserve, who helped cause this crisis by lowering interest rates to 1% at the end of our last bubble and just handed out money creating a new housing bubble, are propping up companies that made bad decisions and failed.

Question written on March 19, 2009

Answer: Well, eventually it will return.

The natural law of "survival of the fittest" knows no exceptions to the business world, and will only be held at bay for so long.

The question is this. Who will they take down with them?

U.S. Senate Commit on Housing Bubble Dedicated to iTulip.com

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Cdo Subprime Mortgage

WAMU –Same Story But Just On A Larger Level

Greed and leverage (Stupidity) over prudence!

Where does it all end?
How much money does the Fed have to keep up on these bailouts?
How more times can JP Morgan and Bank Of America come to the rescue?

Thursday's seizure and sale to JP Morgan is the latest historic step in the Feds attempt to clean up the financial industry awash with toxic mortgage debts,CDOs and CLOs. Now there is even doubt over the so called $700 billion bailout of the entire financial system. The CME Globex futures are down -2110 at the time of this article.

There was a run on the bank when clients of WaMu withdrew $16.7 billion from their accounts since Sept. 16. This left the bank ``unsound,'' according to the FDIC and the Office of Thrift Supervision. WaMu was the second-biggest provider of option ARMs, after Wachovia Corp. Out of the $230 billion in loans secured by real estate at the end of the second quarter, $16.9 billion were subprime mortgages. WaMu, which ranked sixth among U.S. mortgage companies last year, was the 11th-biggest subprime lender in 2006.

One can make the easy assessment that WAMU traded growth over prudence.

Due to WaMu estimated losses of as much as $19 billion in the next 2-1/2 years. S&P cut the bank's credit rating twice in only nine days, leaving it at CCC. Fitch Ratings and Moody's Investors Service cut WaMu to junk this month and have BBB- and Ba2 ratings, respectively. Between the withdrawal of deposits and the ratings it was almost inevitable.

The good news however is that WaMu's branches will open today and depositors will have full access to all their account.

A simple question in which I have posed repeatedly, how many more times can bank customers have the luxury of pulling cash out of their accounts. How many more banks are in as bad of a situation as WAMU? The fact of the matter is that WAMU, has been one of the lenders hardest hit by the nation's housing bust and credit crisis, and had already suffered from soaring mortgage losses. Not all banks were as greedy nor short sighted as had been.

Another one of my simple questions is how many more times either Bank of America or JP Morgan can come to the rescue of other financial institutions. Can they digest all of these different companies? Can they integrate them? Will they be more efficient?

Hopefully they will not retrace the steps of WAMU itself. Beginning in 1995, WAMU went on a shopping spree, making 14 acquisitions by 2002 and boosting assets to more than $300 billion. WAMU was a Wall Street darling as it shares orbited almost 20 fold from 1990 to 2006. There are arguments that they imploded due to their risky lending guidelines as well as the amount of acquisitions over the years. They were swallowing almost a company a year.

What will happen if Bank of America and JP Morgan over due it and choke on all of their acquisitions? What will really happen to the US Financial system or the World Financial system if this becomes the case?

Ultimately for the prudent investor, tremendous opportunities will make themselves present. Stay liquid, reduce your compensation and debt and this crisis might be one of the opportunities of a lifetime.

Andrew Abraham

My Investors Place – A social network site for investors to discuss investment ideas.

Capitalinvestor1836.blogspot.com

About the Author:

Andrew has been in the financial arena since 1990. He is a Registered Investment Advisor ad affiliate of Abraham Bedick Capital. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Article Source: ArticlesBase.com - Wamu –same Story But Just on a Larger Level

Debt Glorious Debt

Mortgage Fraud Arrest Miami

FBI mortgage fraud cases involve drug gangs and organized crime and nets hundreds

Government official says losses in the fraud cases total $1 billion.

By Michael Webster: Investigative Reporter June 19, 2008 6:00 p.m. PDT

Mortgage fraud arrests
video

Hundreds of people across the country have been arrested by law enforcement officials today and yesterday targeting crooked mortgage brokers, real estate agents, industry officials, and drug gangs a top FBI official claims.

Sharon Ormsby, section chief in charge of financial crimes for the FBI, said “some cases, gang, drug and organized crime investigations have resulted in mortgage fraud cases because such schemes enable criminals to launder money.

FBI Director Robert Mueller and Deputy Attorney General Mark Filip announced the arrests the same day of two former Bear Stearns hedge fund managers, Ralph Cioffi and Matthew Tannin, surrendered to the FBI. The men are expected to face federal charges that they intentionally misled investors in two funds that collapsed last summer under the weight of wrong-way bets on mortgage-backed securities.

More than 400 people are believed targets of the far reaching criminal FBI investigations in the mortgage fraud probe. 300 plus suspects have been arrested, including 60 in a coordinated sweep Wednesday, the Justice Department said.

The losses in the mortgage fraud cases cost consumers more than $1 billion, FBI Director Mueller said.

"We will, as appropriate, seek prison terms," Filip said. "It is a very, very serious matter."

"Operation Malicious Mortgage," the investigation by the FBI and Justice Department, began March 1, government officials said. It resulted in 144 fraud cases in which 406 defendants were charged.

The FBI is investigating about 1,400 more cases of potential fraud, Mueller said, calling it "a substantial number of investigations, unfortunately."

The agency has 42 mortgage fraud task forces in operation, employing 180 agents, Mueller said.

Many agencies were credited as contributing to the investigation, including the Internal Revenue Service, the Secret Service, the Department of Housing and Urban Development, immigration and customs agencies, postal inspectors and the Federal Deposit Insurance Corporation.

Most of the arrests came Wednesday, federal law enforcement officials said, in Miami, Houston, San Antonio, Baltimore, Chicago, and other cities.

About the Author:

America's leading authority on Venture Capital/Equity Funding. A trustee on some of the nations largest trade Union funds. A noted Author, Lecturer, Educator, Emergency Manager, Counter-Terrorist, War on Drugs and War on Terrorist Specialist, Business Consultant, Newspaper Publisher. Radio News caster. Labor Law generalist, Teamster Union Business Agent, General Organizer, Union Rank and File Member Grievances Representative, NLRB Union Representative, Union Contract Negotiator, Workers Compensation Appeals Board Hearing Representative. Investigative Reporter for print, electronic and on-line News Agencies.

Article Source: ArticlesBase.com - Fbi Mortgage Fraud Cases Involve Drug Gangs and Organized Crime and Nets Hundreds