And from the LA Times, “The shakeout in the sub-prime lending industry continued Monday, with more people losing their jobs and a prominent lender losing its name on a baseball stadium.” “Fremont General Corp. of Santa Monica said it had told ’significant numbers’ of its 2,400 home-loan employees to expect pink slips in two months.”
“The Orange-based parent of Ameriquest Mortgage Co. and Argent Mortgage Co. announced large but unspecified layoffs last week. On Monday, Ameriquest said that its name was coming off the Texas Rangers’ baseball stadium in Arlington, Texas.”
“‘You almost can relate this to the aerospace industry, when they had those massive layoffs’ after the end of the Cold War, said Jack Williams, president of the California Mortgage Brokers Assn.”One thought is that the Rangers should do a little more research on their next stadium sponsor to make sure that the sponsor won't collapse in a cloud of illegal activity.
If Williams is right, I would expect to see significant outmigration from California over the next few years.
The United States likely will see 1.1 million foreclosures during the next six to seven years on adjustable-rate mortgages issued when home prices were at or near the peak of the market, a study released today by First American Corp. of Santa Ana says. The study assumes that home prices remain unchanged over the next six to seven years. A hypothetical 10 percent price drop, for example, would result in 1.9 million foreclosures, vs. 1.1 million, or 22 percent of the adjustable loans issued in the 2004-06 period.
I think it is fair to say that the assumption regarding home price change is faulty.
"Janet Tavakoli, who runs Tavakoli Structured Finance, points out that AA-rated tranches of CDOs backed by subprime mortgage paper now yield far more than AA-rated debt backed by other assets - a sign that the market doesn’t trust the ratings.” “‘No one believes the ratings have any value,’ she says. Opined Grant’s Interest Rate Observer: ‘We are willing to bet that the agencies assigned too little weight to greed, ignorance, and soft criminality."