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Reggie, I love your work in general, which I usually access in Seeking Alpha, however, I followed a link to this site. You are brilliant, a great writer, and so hard working.

I totally agree with your conclusions about the dire straights of lenders as a result of the housing downturn. The credit and banking crises are now firmly rooted in the situation with home equity loans, which gets way too little attention in any form of public press and discussion. I have a couple of points about the above posting.

CitiMortgage has been one of my favorite lenders for conforming loans for years. They were also one of the biggest and best for home equity loans and HELOCs in the broker channel. Of course, they, and virtually all of the big lenders, except Wells Fargo are completely out of the home equity lending business in the broker channel, if not in direct lending. Most equity lenders limit their loans to 80% CLTV, and even 75% CLTV in CA, AZ, NV, FL, and perhaps WA. I notice that none of your charts and graphs show anything about Citi, and I'll bet they are actually at or near the top of the list of lenders holding equity loans.

Of course, Bank of America bought Countrywide, so the data for those could be combined. Same with WAMU being acquired by Chase. No doubt these were shotgun marriages at the behest of financial and political kingpins, since no investor in their right mind would have been acquiring those "assets" at the time they did in the midst of financial and housing collapse.

As a native of Minneapolis, the home base of US Bank, I also wonder if they too should make your list. I believe they have exposure as big as some of the other major regionals you present.

I was disappointed with one of your comments, echoing a persistent mantra in discussions of the mortgage problem, and that's the suggestion that mortgage brokers fudging data played some significant role in the mortgage crisis. No doubt there were, and possibly are, some who did that, but I assure you it could not have been a statisticaly significant factor in the scope of the crisis, and to the extent that it was, it could only have existed with the deliberate complicity of mortgage underwriters risking their jobs, a highly unlikely scenario. The truth is, most mortgage brokers had so much genuine business in the 2002-2006 stretch, that fraud was unncessary. Further, if you had actually experience originating mortgages, whether as a broker or an employee of a lender, you'd know that the toughest part of originating any loan is getting over all of the very specific and difficult hurdles of the guidelines in underwriting. Of course, those hurdles were much lower for certain loans when there was credit/asset lending in the form of stated income, no ratio and no doc loans, none of which exist anywhere any longer in the mass markets for mortgages, but were very popular among the large crowd of underemployed and unemployed with excellent credit who were trying to refinane for a lower rate or to gain access to new equity.

Looking the future of housing, we have the following immediate, significant, adverse developments in the mortgage market: (1) the USDA Rurual Housing Program just ran out of funds and lenders have suspended all applications for the same in the last two weeks; (2)at the end of March the Fed will stop buying debt of the government sponsored mortgage agencies, Fannie and Freddie, and Ginnie; (3) HARP was due to expire end of March, but got extended through the end of June. Barring reversals of the foregoing, that's going to prevent prevent a lot of immedate and potential purhases and refinances, that might have occurred either soon or when the economy recovers enough to employ significant numbers of those who are unemployed now (no loans available now without a regular job o with two years tax returns for self-employed). Foreclosures were projected for another 3-4 million in 2010, but with 14% of mortgages in default, and still rising, and the unemployment dragging on, I bet it turns out to be more than 3 million. I don't see how housing values cannot fall 10-20% more in absence of significant job growth in the very near futre.

It seems to me that the only things holding up, or pushing up the bank stocks, for that matter stocks in general, could be high velocity trading, hedged buy programs by well-heeled entities (including the Fed?), and short covering by many investors who are rationally short.