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
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
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th 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