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No bueno amigos February 21, 2008

Posted by Who? in Random.
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U.S. Home Loan Demand Plunges as Interest Rates Soar 

“The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Feb. 15 fell 22.6 percent to 822.8, the lowest level since the week ended Jan. 4.”  Full article here.

 I think this might be more storm clouds on the horizon.   This could mean that another round of nasty write-offs are coming down the pipeline.  My initial feelings about Project Lifeline are all but confirmed.  It was never intended to actually help those in need, homeowners, it was pushed so that banks and anyone else on the Street caught with their pants down could scramble for cover.

A moratorium on foreclosure proceedings is in the best interest of anyone holding MBS’s anyways.  Calling a cease fire for 30 days just puts the potential shit-storm off for a month.  You can’t change the fact that people got into properties that they couldn’t/can’t realistically pay for.  Joe Homeowner can’t refi a house when the first mortgage is more than the falling market price.  Joe Homeowner couldn’t afford it in the first place.

Sucks to be so bearish right now but I’m feeling another round of bad news coming real soon.

“Federal Reserve officials project about 2 million homeowners face higher mortgage rates over the next two years as their loans reset higher. Economists at the Federal Deposit Insurance Corp. estimate foreclosures this year will be about 1 million more than average, a level that FDIC Chairman Sheila Bair has said “is just too high.” They average about 600,000 in a typical year.”

And I haven’t even started on Credit Default swaps yet…

All of that said, I feel comfortable telling anyone that wants to listen to get out of the market and wait until this shit plays out.  Just my $.02.

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