It begins ?

[uscitizen]

New Century Gets Default Claims, Says It Lacks Cash

By Bradley Keoun and Yalman Onaran

March 12 (Bloomberg) -- New Century Financial Corp., the nation's second-biggest subprime mortgage lender, said it doesn't have the cash to pay creditors who are demanding their money, increasing speculation that the company will go bankrupt.

The New York Stock Exchange, citing the credit crisis, halted trading of New Century this morning until it decides whether to keep listing the company's securities. Shares of the Irvine, California-based company, already down 90 percent in 2007, lost half their remaining value in pre-market trading, and rivals fell as much as 25 percent today.

``They're one step closer to bankruptcy,'' said Bose George, an analyst at Keefe Bruyette & Woods in New York who rates the shares ``market perform.'' ``The only possibility for survival now is for someone, potentially an investment bank, to step in.''

New Century may be insolvent because too many of its own customers -- most of whom have poor credit histories or heavy debt burdens -- aren't repaying their loans. Bad U.S. subprime mortgages are at a seven-year high, forcing more than two dozen lenders to close or sell operations. Their woes may contribute to more than 1.5 million Americans losing their homes and 100,000 people losing their jobs, according to real estate executives, economists, analysts and a Federal Reserve governor.

New Century said in a federal filing it doesn't have funds to repay lenders including Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc. The creditors want New Century to repurchase all outstanding mortgage loans they financed.

http://quote.bloomberg.com/apps/news?pid=20670001&refer=&sid=aY3mu1qdRq94

 

[TRGLDTE]

New Century Gets Default Claims, Says It Lacks Cash

By Bradley Keoun and Yalman Onaran

March 12 (Bloomberg) -- New Century Financial Corp., the nation's second-biggest subprime mortgage lender, said it doesn't have the cash to pay creditors who are demanding their money, increasing speculation that the company will go bankrupt.

The New York Stock Exchange, citing the credit crisis, halted trading of New Century this morning until it decides whether to keep listing the company's securities. Shares of the Irvine, California-based company, already down 90 percent in 2007, lost half their remaining value in pre-market trading, and rivals fell as much as 25 percent today.

``They're one step closer to bankruptcy,'' said Bose George, an analyst at Keefe Bruyette & Woods in New York who rates the shares ``market perform.'' ``The only possibility for survival now is for someone, potentially an investment bank, to step in.''

New Century may be insolvent because too many of its own customers -- most of whom have poor credit histories or heavy debt burdens -- aren't repaying their loans. Bad U.S. subprime mortgages are at a seven-year high, forcing more than two dozen lenders to close or sell operations. Their woes may contribute to more than 1.5 million Americans losing their homes and 100,000 people losing their jobs, according to real estate executives, economists, analysts and a Federal Reserve governor.

New Century said in a federal filing it doesn't have funds to repay lenders including Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc. The creditors want New Century to repurchase all outstanding mortgage loans they financed.

http://quote.bloomberg.com/apps/news?pid=20670001&refer=&sid=aY3mu1qdRq94

What a piece of shit article! Cause and effect, anyone? Complete horseshit - not a single person will lose their home because New Century fails.

 

[Cancel 2016.2]

Other way around Trog.... companies like New Century are going down because the people they loaned money to (high risk customers) are not paying back their loans due to increases in mortgage payments.

Accredited home lenders is right behind New Century. Getting hammered again today.

 

[uscitizen]

News today says world marketas are falling largely becduase of the mortgage industry problems in the US. I called it and have warned of this problem coming for over a year.
Belittle this if you want, but wait and see.

 

[TRGLDTE]

Other way around Trog.... companies like New Century are going down because the people they loaned money to (high risk customers) are not paying back their loans due to increases in mortgage payments.

Accredited home lenders is right behind New Century. Getting hammered again today.

Exactly - that is why I posted "Cause and effect, anyone?" and called the article complete horseshit. I'm glad someone besides me got it.

 

[TRGLDTE]

News today says world marketas are falling largely becduase of the mortgage industry problems in the US. I called it and have warned of this problem coming for over a year.
Belittle this if you want, but wait and see.

I'm not belittling anything. New Century will fail because their borrowers are in default, and not a single person (who is not in default) will lose a home due to this failure. That's not my opinion, that's a matter of law.

Now might be a good time to cozy up to the Non-performing assets person at New Century, because the first thing that will happen is that the regulators will make them blow out the REO sheet.

 

[uscitizen]

If the mortgage company goes bust doe we get our loan cancelled ? Oops I forgot that only works one way.

 

[Cancel7]

I believe most of these subprime mortgage holders have adjustable rates. So they got a mortgage at a advertised low rate, and subsequently their interest rates have sky-rocketed.

That these adjustable rate mortgages were bound to cause a crash, has been predicted by economists for YEARS. Krugman has been writing about it for longer than I can remember.

What happened to these people reminds me very much of the beginning part of Upton Sinclair’s “The Jungle”. If you’re not familiar with the work, get familiar with it.

So BOO HOO to the poor subprime mortgage companies who are getting hoisted on their own petard now.

 

[Damocles]

If the mortgage company goes bust doe we get our loan cancelled ? Oops I forgot that only works one way.

Nope they get sold to a more solvent company.

 

[TRGLDTE]

USC said: If the mortgage company goes bust do we get our loan cancelled ? Oops I forgot that only works one way.

Nope they get sold to a more solvent company.

Fire sale prices, too. A strong acquirer will come out just fine on this.

 

[uscitizen]

Yep, like I said it only works one way.

 

[TRGLDTE]

I believe most of these subprime mortgage holders have adjustable rates. So they got a mortgage at a advertised low rate, and subsequently their interest rates have sky-rocketed.

That these adjustable rate mortgages were bound to cause a crash, has been predicted by economists for YEARS. Krugman has been writing about it for longer than I can remember.

What happened to these people reminds me very much of the beginning part of Upton Sinclair’s “The Jungle”. If you’re not familiar with the work, get familiar with it.

So BOO HOO to the poor subprime mortgage companies who are getting hoisted on their own petard now.

I have agreed with Krugman on this for as long as I can recall, you know that.

I have no heartache with these guys failing - so be it. I won't shed a tear. But, like Enron, not hoisted by their own petard. A lot of people think that a repo / foreclosure ends the problem; they've never heard of a deficiency judgment. Anything that they can't wring out of the borrower will be 'eaten' by the investors.

Nor will I shed a tear for the borrowers who defaulted. For the most part, they understood the risk they were assuming when they took the money. Our covetousness (it is a word, Dix) of other people's stuff leads us to do ridiculous things.

My beef is that the news article is inaccurate - "1.5 million people to lose their homes" (because of greedy businessmen subtext) - according to unnamed people. A Fed Governor said that? I want to see the verbatim quote because I'll bet he was misquoted. If it was not misquoted, then that Fed Governor needs to be removed for stupidity.

This claim is in direct contradiction to the law. (1) Nowhere in a Security Deed (mortgage) is the lender empowered to accelerate the loan, let alone "auction under power," because of their failure; (2) A lender is barred from beginning the foreclosure process on a loan that is current; (3) A lender can not refuse to allow the borrower to fulfill their contractual obligation (i.e., they can not refuse to accept 'good' payment, thus creating a default condition). Summary: If you keep making the payment on time, they can't touch you.

 

[Cancel7]

I have agreed with Krugman on this for as long as I can recall, you know that.

I have no heartache with these guys failing - so be it. I won't shed a tear. But, like Enron, not hoisted by their own petard. A lot of people think that a repo / foreclosure ends the problem; they've never heard of a deficiency judgment. Anything that they can't wring out of the borrower will be 'eaten' by the investors.

Nor will I shed a tear for the borrowers who defaulted. For the most part, they understood the risk they were assuming when they took the money. Our covetousness (it is a word, Dix) of other people's stuff leads us to do ridiculous things.

My beef is that the news article is inaccurate - "1.5 million people to lose their homes" (because of greedy businessmen subtext) - according to unnamed people. A Fed Governor said that? I want to see the verbatim quote because I'll bet he was misquoted. If it was not misquoted, then that Fed Governor needs to be removed for stupidity.

This claim is in direct contradiction to the law. (1) Nowhere in a Security Deed (mortgage) is the lender empowered to accelerate the loan, let alone "auction under power," because of their failure; (2) A lender is barred from beginning the foreclosure process on a loan that is current; (3) A lender can not refuse to allow the borrower to fulfill their contractual obligation (i.e., they can not refuse to accept 'good' payment, thus creating a default condition). Summary: If you keep making the payment on time, they can't touch you.

Is it really possible that people getting these adjustable rate mortgages understood that their payments were going to shoot up hundreds of dollars a month, to levels they would not be able to afford? I fear that they might not be very bright people, and didn’t understand it.

I understand what your beef is. I wonder though, as these companies go out of business, the mortgages they hold will be sold right? And will they not be sold to companies who specialize in collecting debt from high risk creditors? And if that’s the case, will their interest rates go up even higher? Could that be what his statement alludes to do you think?

 

[TRGLDTE]

Is it really possible that people getting these adjustable rate mortgages understood that their payments were going to shoot up hundreds of dollars a month, to levels they would not be able to afford? I fear that they might not be very bright people, and didn’t understand it.

I understand what your beef is. I wonder though, as these companies go out of business, the mortgages they hold will be sold right? And will they not be sold to companies who specialize in collecting debt from high risk creditors? And if that’s the case, will their interest rates go up even higher? Could that be what his statement alludes to do you think?

It has become normal for ordinary people to speculate on property. The problem is that they are speculating on their home. I doubt it is a lack of knowledge that leads to this, but rather greed, denial, and covetousness.

No, the 'mortgages' will be sold to another chartered lending institution, not a collection agency. The original terms of the loan still stand despite the transfer to another party. The foreclosure procedures are part of the legal code of each state - the process is well defined - trasnfer / assignment from one lender to another has no effect other than changing who has the right to receive payment. It does not create additional rights beyond what's in the contract, it does not change the payment, the interest rate, or any terms.


Technical stuff -
I used the term 'mortgage' because it really comprises two parts, except in the 13 states that use mortgage theory. (I'm in GA, which is Title theory, so that's what I'll use as my base. Thirty-six states use Title theory, and no one knows what's going on in Louisiana with the old Napoleonic code).

The first part is a promissory note (the loan), and the second is a lien to secure debt. The original promissory note is not filed at the courthouse - it is a transferable instrument. The lien is recorded at the county courthouse as a Security Deed (a form of conditional title - but that's another matter). In addition, a form of Warranty Deed, Quit Claim Deed, or other vehicle that transfers the title, is recorded at the courthouse. So a sale of a 'mortgage' is actually a transfer (sale) of the promissory note accompanied by an assignment of the Security Deed.

 

[Cancel7]

Ok. Interesting.

Maybe he was quoted out of context then.

As far as the motives of the borrowers, we’ll agree to differ. You’re a pessimist about human nature though Trog!

 

[uscitizen]

I feel this is just the beginning of something far larger. Ie low savings rates, maxxed credit, etc...
the impact on our economy will be hard felt.
Dow is down below 12,000 for the first time since early last NOV.

 

[Cancel7]

I feel this is just the beginning of something far larger. Ie low savings rates, maxxed credit, etc...
the impact on our economy will be hard felt.
Dow is down below 12,000 for the first time since early last NOV.

Oh I think that's very possible, though I hesitate to say so, because threads like this draw Topspin the way fire sales draw Republicans and any minute we will be treated to him tap-dancing out here to give us another rendition of “oh sweetheart won’t you stay in the kitchen and leave the finances to us menfolk, won’t you, won’t you?”

But if you read the report closely, it’s clear that the defaults, foreclosures, and late payments are not solely within the subprime category. The question that nobody can answer right now (except I’m sure, for Top), is how deep the damage will go in the broader mortgage category.

 

[uscitizen]

forclosures overall have doubled for the last couple of years.

yes per this report it is only subprime.

Spinner can tapdance all he wants I am currently making about 400% in the stock market if I annualize it out. I will just smile when he tries to make me look stupid

an economy that relies at least 2/3 on consumer spending cannot last too long considering the majority of the consumers situations.

 

[TRGLDTE]

Oh I think that's very possible, though I hesitate to say so, because threads like this draw Topspin the way fire sales draw Republicans and any minute we will be treated to him tap-dancing out here to give us another rendition of “oh sweetheart won’t you stay in the kitchen and leave the finances to us menfolk, won’t you, won’t you?”

But if you read the report closely, it’s clear that the defaults, foreclosures, and late payments are not solely within the subprime category. The question that nobody can answer right now (except I’m sure, for Top), is how deep the damage will go in the broader mortgage category.

The crux of the biscuit is the apostrophe.

Yes, that is the $64 question. The number of foreclosures is up in every price segment. (P.S. It's Clinton's fault)

 

[uscitizen]

The crux of the biscuit is the apostrophe.

Yes, that is the $64 question. The number of foreclosures is up in every price segment. (P.S. It's Clinton's fault)

I thought it was Kennedys fault