Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
Will Biden’s Neo-Populist Economic Doctrine Support Gold? - 25th Sep 21
Markets Deflationary Winds Howling - 25th Sep 21
Crude Oil Price Piercing the Sky: Where Will We See the Black Gold by Xmas? - 25th Sep 21
Cryptocurrency policy choices and consequences - 25th Sep 21
The Next Emma Raducanu UK Tennis Star Pleasing the Crowds at Millhouses Park Sheffield - 25th Sep 21
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
HOW TO SAVE MONEY ON CAR INSURANCE - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Credit Crunch Cancer Metastasizing

Companies / Credit Crisis 2008 Sep 01, 2008 - 01:14 AM GMT

By: Money_and_Markets

Companies

Best Financial Markets Analysis ArticleMartin Weiss writes: First, the subprime mess clobbered subprime lenders like Countrywide Financial.

Then, the cancer spread to America's largest banks that invested heavily in risky mortgage-backed securities.

Now, it's metastasizing again — spreading to regional and state banks as well.


Two prime examples: Integrity Bank of Alpharetta, Ga., which just failed Friday with nearly a billion in deposits ... plus an even larger bank in trouble: BankUnited Financial Corp.

BankUnited is Florida's largest bank with 85 branches in 13 counties and with total assets of $14.2 billion.

In the first three quarters of last year, it reaped a profit of $23.2 million. The first three quarters of 2008? $200 million in losses!

Why? Because a whopping 58% of the bank's "assets" are option ARMs.

Like other adjustable-rate mortgages, option ARMs lure in unqualified homebuyers with bargain-basement interest rates ... then jack up rates — and loan payments — in later years. What's worse, each month, an option ARM gives borrowers three choices:

Option #1. Pay principle and interest normally.

Option #2. Pay interest only.

Option #3. Make a bare minimum payment that doesn't even cover all the interest due.

What happens to the unpaid interest? It gets tacked on to the unpaid balance.

The big time bomb: Borrowers are only allowed to do that for a pre-specified period of time or until their loan balance rises to a certain threshold, typically 110% or 115% of the original loan amount.

When that happens, they have to make the full payment — principle AND interest ... which can be many times higher than the minimum payments.

That's why massive numbers of borrowers are choosing a fourth "option" which no one anticipated: No payment whatsoever . In other words, DEFAULT.

And that's also why ...

The Amount of Non-Performing Loans At BankUnited Has Surged 770% Just in the Last Twelve Months!

And if you think that's bad, the loans the bank doesn't expect to be repaid has soared a staggering 1,964% since this time last year.

Meanwhile, the non-performing loans in BankUnited's portfolio are rising at the rate of 10% per month — and the number of foreclosures in the bank's inventory is up 18% in July alone.

Now, the government is demanding that BankUnited raise $400 million of new capital and offset losses on its $10 billion of home loans.

Bottom line: BankUnited's stock is already down 91% in 12 months. And analysts are warning that it's likely to fail!

BankUnited Is DEFINITELY Not the Only Bank in This Soup!

If BankUnited were an anomaly, it wouldn't be such big news. But the fact is, the cancer that's brining down Florida's largest bank has also reached a raft of other financial institutions stuck with massive amounts of option ARMs.

  • At Bank of America , the $25.4 billion in option ARMs it acquired when it bought Countrywide are sinking fast. A whopping 72% of the borrowers aren't even paying all the interest due on these loans. One in eight is at least ninety days late on payments.
  • At Wachovia , the story is similar: Wachovia bought Golden West Financial at the peak of the real estate bubble in 2006 and as a result now has $122 billion of option ARMs in its portfolio — a staggering 25% of its total assets. Some 14% of those option ARM customers already have zero — or negative — equity in their homes. And that's only going to get worse as home prices depreciate further.
  • And at banks all across the country , we see the same pattern.

This is why we've repeatedly urged you to take two crucial steps while you still have time ...

FIRST, to achieve true safety for your money, don't wait one more day to take the steps we set forth for you in our recent "X" List video .

SECOND, once you've got most of your money — even as much as 90% — in safe, conservative investments, seriously consider using hedges such as inverse ETFs or put options — designed to soar in times like these — to help protect your investment portfolio.

Good luck and God bless!

Martin

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

pete
05 Sep 08, 20:58
defaults

The only two tragic things in all this is;

1. The whores in D.C. keep giving BILLIONS to the terrorist nation of Israhell and, 2., they'll bail out their buddies with tax-payer dollars. Lastly, after they've killed the goose that laid the golden egg,...they'll Jet to their new resort called Dubai before the ignorant (m)asses in this sewer wake up and vent their rage on 'em.


Post Comment

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