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The mortgage market has not even started to "really" fall apart yet. The "worst is behind us", indeed!

U.S. Mulls Future of Fannie, Freddie

The Bush administration has held talks about what to do in the event mortgage giants Fannie Mae and Freddie Mac falter, according to three people familiar with the matter, as the stock prices of both companies continue to fall sharply.

These were two of the most obvious shorts to make in the mortgage crisis -pure mortgage lenders and insurers!

From Bloomberg: Fannie Mae, Freddie Losses Make Them `Insolvent,' Poole Says :

Chances are increasing that the U.S. may need to bail out Fannie Mae and the smaller Freddie Mac, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, he said. The fair value of Fannie Mae's assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said.

``Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer,'' Poole, 71, who left the Fed in March, said in the interview yesterday.


Foreclosures Rose 53% in June as U.S. Bank Repossessions More Than Doubled:

 Reggie's Archives

U.S. foreclosure filings rose 53 percent in June from a year earlier and bank repossessions almost tripled as deteriorating property values and higher payments on adjustable mortgages forced more people to give up their homes.

More than 252,000 properties, or one in every 501 U.S. households, were in some stage of foreclosure, RealtyTrac Inc., an Irvine, California-based seller of default data, said today in a statement. Nevada, California and Arizona had the highest foreclosure rates.

``The foreclosure problem is getting worse and will stay with us well into the next decade,'' Mark Zandi, chief economist for Moody's in West Chester, Pennsylvania, said in an interview. ``The job market is eroding and homeowners have less equity. Lenders are much less willing to work with you if you've got negative equity, and you're more likely to give up your house if you're deeply underwater.''

I can only say I told you so. I finally got my archives fixed. There are almost 450 articles going back to September 1st of last year. See them in the sidebar on the right or in the menu column on the left as you scroll down. I recieved this in the mail yesterday (Hat tip to M), which confirms the news story above with ferver:

doc 07-2008_unreal_estate_monthly 10/07/2008,06:48 45.50 Kb


Devaney Liquidates United Capital Hedge Funds at Total Loss on Margin Call:

John Devaney is liquidating hedge funds at his United Capital Markets Holdings Inc. after failing to meet a margin call from Deutsche Bank AG.

Deutsche Bank seized and auctioned off collateral after the Horizon group of funds failed to meet the bank's demands, according to a letter to clients obtained by Bloomberg News yesterday. The funds were frozen a year ago because of wrong-way bets on mortgage securities.

``The survival of the funds and any potential recovery for their investors has been dependent on these lenders continuing their relationships with the funds,'' Devaney wrote in the letter dated July 9. United Capital is based in Key Biscayne, Florida.

The global credit rout spurred by the collapse of the subprime-mortgage market has led firms from Sailfish Capital Partners LLC to Peloton Partners LLP to liquidate funds or shut down this year. Fixed-income hedge funds are among the worst- performing groups, according to data compiled by Hedge Fund Research Inc. in Chicago. Hedge funds overall have lost 0.2 percent this year through May, Hedge Fund Research said.

This happens much more than is reported in Bloomberg. What do you think happens to the marks in the MBS market everytime there is a forced liquidation due to a margin call. Do you really think valuations get better for everyone? The worse it gets, the worse it is going to get.

S&P 500 Index May Lose Another 12% Before Bear Market Ends, History Shows: maybe or maybe not, but the Asset Securitization Crisis will reverbrate farther than that, an methinks a consequence will be a deeper, broader bear than this generation is used to seeing.

Huge FDIC Hit Seen If IndyMac Collapses
A collapse of IndyMac could be one of the costliest failures in recent memory because of poor market conditions and high reliance on FHLB advances, observers said Wednesday.

Citigroup Looking for Exit from Texas
Several industry sources said the nation's largest banking company is actively seeking a buyer for the rest of its Texas franchise.

Wachovia Hires Treasury Official as CEO, Sees 2Q Loss
Smith to remain Chairman
Wachovia late Wednesday named Treasury Undersecretary Robert K. Steel as its CEO and president and said its 2Q results will be hurt by higher provision expenses and charges.

Bankers, Clients Views on Cycle Diverge
Bankers are more pessimistic than their business customers about the economy, according to a pair of surveys conducted in the second quarter.