Best of the Week
Most Popular
1. Dollargeddon - Gold Price to Soar Above $6,000 - P_Radomski_CFA
2.Is Gold Price On Verge Of A Bottom, See For Yourself - Chris_Vermeulen
3.Dow Stock Market Trend Forecast 2018 - Nadeem_Walayat
4.Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - P_Radomski_CFA
5.Why The Uranium Price Must Go Up - Richard_Mills
6.Dow Stock Market Trend Forecast 2018 - Video - Nadeem_Walayat
7.Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - GoldCore
8.More Signs That the Stock Market Will Rally Until 2019 - Troy_Bombardia
9.It's Time for A New Economic Strategy in Turkey - Steve_H_Hanke
10.Fiat Currency Inflation, And Collapse Insurance - Raymond_Matison
Last 7 days
China Is Building the World’s Largest Innovation Economy - 21st Sep 18
How Can New Companies Succeed in the Overcrowded Online Gambling Market? - 21st Sep 18
Golden Sunsets in the Land of U.S. Dollar Hegemony - 20th Sep 18
5 Things to Keep in Mind When Buying a Luxury Car in Dubai - 20th Sep 18
Gold Price Seasonal Trend Analysis - Video - 20th Sep 18
The Stealth Reason Why the Stock Market Keeps On Rising - 20th Sep 18
Sheffield School Applications Crisis Eased by New Secondary Schools Places - 20th Sep 18
Precious Metals Sector: It’s 2013 All Over Again - 19th Sep 18
US Dollar Head & Shoulders Triggered. What's Next? - 19th Sep 18
Prepare for the Stock Market’s Volatility to Increase - 19th Sep 18
The Beginning of the End of the Dollar - 19th Sep 18
Land Rover Discovery Sport 'Approved Used' Bad Paint Job - Inchcape Chester - 19th Sep 18
Are Technology and FANG Stocks Bottoming? - 18th Sep 18
Predictive Trading Model Suggests Falling Stock Prices During US Elections - 18th Sep 18
Lehman Brothers Financial Collapse - Ten Years Later - 18th Sep 18
Financial Crisis Markets Reality Check Now in Progress - 18th Sep 18
Gold’s Ultimate Confirmation - 18th Sep 18
Omanization: a 20-year Process to Fight Volatile Oil Prices  - 18th Sep 18
Sheffield Best Secondary Schools Rankings and Trend Trajectory for Applications 2018 - 18th Sep 18
Gold / US Dollar Inverse Correlation - 17th Sep 18
The Apple Story - Trump Tariffs Penalize US Multinationals - 17th Sep 18
Wall Street Created Financial Crash Catastrophe Ten Years Later - 17th Sep 18
Trade Wars Are Going To Crash This Stock Market - 17th Sep 18
Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - 17th Sep 18
Financial Markets Macro/Micro View: Waves and Cycles - 17th Sep 18
Stock Market Bulls Prevail – for Now! - 17th Sep 18
GBPUSD Set to Explode Higher - 17th Sep 18
The China Threat - Global Crisis Hot Spots & Pressure Points - 17th Sep 18 - Jim_Willie_CB
Silver's Relationship with Gold Reaching Historical Extremes - 16th Sep 18
Emerging Markets to Follow and Those to Avoid - 16th Sep 18
Investing - Look at the Facts to Find the Truth - 16th Sep 18
Gold Stocks Forced Capitulation - 15th Sep 18
Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - 15th Sep 18
Trading The Global Future - Bad Consequences - 15th Sep 18
Central Banks Have Gone Rogue, Putting Us All at Risk - 15th Sep 18
Gold Price Seasonal Trend Analysis - 14th Sep 18
Growing Number of Small Businesses Opening – and Closing – In the UK - 14th Sep 18
Gold Price Trend Analysis - Video - 14th Sep 18
Esports Is Exploding—Here’s 3 Best Stocks to Profit From - 13th Sep 18
The Four Steel Men Behind Trump’s Trade War - 13th Sep 18
How Trump Tariffs Could Double America’s Trade Losses - 13th Sep 18
Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - 13th Sep 18
Trading Cryptocurrencies: To Win, You Must Know Where You're Wrong - 13th Sep 18
Gold, Silver, and USD Index - Three Important “Nothings” - 13th Sep 18
Precious Metals Sector On a Long-term SELL Signal - 13th Sep 18
Does Gambling Regulation Work - A Case Study - 13th Sep 18
The Ritual Burial of the US Constitution - 12th Sep 18
Stock Market Final Probe Higher ... Then the PANIC! - 12th Sep 18
Gold Nuggets And Silver Bullets - 12th Sep 18
Bitcoin Trading - SEC Strikes Again - 12th Sep 18

Market Oracle FREE Newsletter

Trading Any Market

WaMu's Suspect Mortgage Pool- Fallout from Liar Loans Continues

Housing-Market / US Housing May 07, 2008 - 07:22 AM GMT

By: Mike_Shedlock

Housing-Market Best Financial Markets Analysis ArticleI have been tracking a particular Washington Mutual (WM) Alt-A mortgage pool for several months. The pool is known as WMALT 2007-0C1.


In Evidence of "Walking Away" In WaMu Mortgage Pool , I wrote about data January.
The February update was WaMu Alt-A Pool Revisited .
The March update was called WaMu Alt-A Pool Deteriorates Further .

This is the April Update

WMALT 2007-0C1 April Picture



January Pool Stats
  • 19.3% 60 day delinquent or worse
  • 13.15% Foreclosure
  • 1.83% REO
February Pool Stats
  • 22.69% 60 day delinquent or worse
  • 11.62% Foreclosure
  • 3.56% REO
March Pool Stats
  • 25.3% 60 day delinquent or worse
  • 13.35% Foreclosure
  • 4.44% REO
April Pool Stats
  • 29.07% 60 day delinquent or worse
  • 13.87% Foreclosure
  • 6.21% REO

Note the above progression. This cesspool from May of 2007, was 92.6% originally rated AAA, even though loans had full doc only 11% of the time. In one year, the pool was 29.07% 60-day delinquent or worse. Of that, 13.87% is in foreclosure and 6.21% is bank owned real estate.

The problem should be clear. In no way shape or form, should any package of liar loans been rated AAA.

Thanks to "CS", "YV" and several others for emailing me the latest chart. Chris Puplava at Financial Sense went one further and sent in the following charts to consider.

Pool Balance vs. 60 Day or worse Delinquencies

Pool balance is left scale (red)
Delinquencies 60 day or worse is right scale (green)
Delinquencies 90 day or worse is right scale (blue)




REOs vs. Foreclosures



Thanks for those charts Chris!

REOs Rising Faster Than Foreclosures

The above image is particularly interesting. Are banks so loaded to the gills in REOs they are reluctant to start more foreclosures? If so, people are now living in their homes for free. There have been various media reports of this happening.

As bad as that sounds, from a bank perspective that is better than having a house sit there to become infested by vermin, rats, bees, mold etc. I spoke on the phone with Mike Morgan this morning and he tells me the latter is happening right now in Florida. Some homes are so infested with mold they are a health hazard and have to be bulldozed down. Total loss to the lender is 100%, perhaps greater if they have to pay to clean up the mess!

This Alt-A pool may not be indicative of all Alt-A pools but it likely indicative of what is happening to liar loan Alt-A pools in California and Florida. Furthermore, I believe all Alt-A pools (because that is where the bulk of the liar loans and option ARMs are hidden), are extremely suspect.

Just yesterday it was reported that Bank of America (BAC) is reconsidering its deal with Countrywide Financial (CFC). I talked about this yesterday in Countrywide Shares Worthless?

Professor Sedacca commented " Buried in the $2 billion investment Bank of America (BAC) made in CFC was the fact that BAC has 'last look' to buy the company. That was the main reason for that deal, me thinks. So I imagine common shareholders get little if anything, preferred holders get potentially wiped out and some subordinated debt holders could get smoked as well. The same could be said for Washington Mutual(WM). "

Indeed. And if Bank of America is investigating Countrywide Alt-A pools that look anything like the above, they cannot possibly be liking what they see.

Meanwhile Bernanke Urges Action to Slow Foreclosures . Inquiring minds may wish to open that link to see a series of charts from Bernanke's perspective. The Fed is clearly spooked, and rightfully so. However, the Fed is powerless to halt changing attitudes towards walking away and it is a moral hazard to even attempt to do so at taxpayer expense.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance, low volatility, regardless of market direction. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility. You are currently viewing my global economics blog which has commentary 7-10 times a week. I am a "professor" on Minyanville. My Minyanville Profile can be viewed at: http://www.minyanville.com/gazette/bios.htm?bio=87 I do weekly live radio on KFNX the Charles Goyette show every Wednesday. When not writing about stocks or the economy I spends a great deal of time on photography. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at www.michaelshedlock.com.

© 2008 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules