Posts Tagged ‘Analysis’
An interesting interview on Bloomberg TV is sure to bring relief to HSBC’s tax buddy. Wilbur Ross’s WL Ross & Co. LLC agreed to buy the mortgage servicing unit of H&R Block Inc., the biggest U.S. tax preparer, for about $1.1 billion. The purchase of H&R Block’s unit will create the second-largest U.S. subprime servicing portfolio after Countrywide Financial. Block’s unit does billing and collections for about $53 billion of subprime mortgages, Ross said.
Even though the government came up with $200 billion of our money as a “new plan for help”, the fact remains that AAA bond ratings are still a joke. Why aren’t they downgraded? Sticking to the rules would strip at least $120 billion in bonds of their AAA status, extending the pain of a mortgage crisis that’s triggered $188 billion in writedowns for the world’s largest financial firms. Obviously stripping $120 billion when the Fed provided $200 billion is counterproductive, even if it is the right thing to do. Once again we are being played like a cheap guitar.
After a brief break from writing about the mortgage industry the team at Mortgage Blues has studied end of the year financial reports and the news is not good. One lender that stands out is Thornburg. These guys liked California, Arizona and other areas that required jumbo mortgages. JPMorgan issued Thornburg with a “default notice” after the lender was unable to meet a $28 million margin call, which the bank demanded after a significant decline in the value of its assets.
Countries around the world appear to hold the United States responsible for the subprime crisis, as they rightfully should. In the United States many people hold the federal government responsible for lack of regulatory enforcement. Tracking the issue back even further, state regulations were set aside in favor of federal-level regulations established by the Office of the Comptroller of the Currency. In reality the OCC did little or nothing.
This morning AFP reported that mortgage lenders targeted minorities and people with low incomes in recent years as the “best candidates” for subprime home loans. Also this morning, the New York Times says women were subprime targets. A very telling report, shown in detail by Household – HSBC Watch, shows how a military family was targeted (see it) while showing exactly how subprime loans worked. Clearly almost anyone could have been a subprime victim.