Mr Mortgage - HERE COMES THE ALT-A CRISIS 4-16-08

[sha370z]

people have no saving

[spectrum0590]

Great video! Mr mortgage does provide credible information about finance industry especially about real estate and mortgages.

[BOGZASV8MA]

old video

[mozilloCEO]

you know nothing. you're an ant in the afterbirth.

[2fuck2shit2]

What is the Key disfavors by Having Your Mortgage

realmortgagepaid.blogspot. com

[high5flyer]

The problems we are experiencing are not caused by sub-prime. It is a break down in society that is causing this problem! Japan experienced a decade known as the "Lost Decade." Japan is now experiencing two decades of economic turmoil due to this crisis. The 3rd decade is starting for them! We are just starting down a similar path, so how long will our economic problems last? The US will not have a "Lost Decade," but will have a "Lost Generation" due to how in debt young people have become.

[vinayakaya]

This problem can't be addressed it can only be endured... However, enduring something like this will be impossible for our economy now that we have allowed the fed to waste the revenue for the next 30 years on failed bail outs.

[BBmyQ]

more false BS--actually ACORN along with congress forced lenders to give credit to people with poor credit--and banks got greedy and did what they asked. That coupled with poor financial awareness of the borrower not reading thier loan documents caused the problem..

[encantoman]

sorry for latenessin my comment, BBmyQ, but when I see guys like the former countrywide crew reforming to catch riches on the downside, I cant help but think that when they were 'forced' to lend, it was more of a brer rabbit, 'please dont throw me into that thicket' deal. the bigs needed feedstock of loans, any loan would do, to securitize.

[DrewDownsManagement]

Very informative video. I took some notes on the video and how it was done. I gave it 5 stars. Check out our vids and tell me what you think? We have some good stuff also.

[DebtElimination]

good.

[marky1333]

Great vid thanks for the info.

[gunsandroses1111]

There is a recession around every 18 years. Let it pass through then everyone can get back to "borrow and spend" .... till the next one ...

[kosai19]

There won't be a next one.

[papatoony]

How can the problem be addressed?? All that money is GONE. The damage was done when the loans were given out...what can possibly be done about it at this point?

[MRMILO57]

Anyone that has taking on a mortgage in the past number of years (and deep down new they could not afford it) are to blame for this mess just as much as the banks and the corperations!

I have no sympathy for either!

Why should us innocent tax payers bale your greed and stupidity.

[nawkrm]

You're absolutely right. People took out mortgages they knew they couldn't afford simply because they expected to make a quikc profit by flipping the properties. The banks made those loans available, but those greedy flippers are the ones who chose to take a risks.

[MRMILO57]

nawkrm ......bud, that's exactly what has been happening in Australia here, in Queensland they were called the 'RENO KINGS'.....they buy a house that needs work, cheap as!... very cheap and tacky fittings and even used secondhand fixtures, sold it at a silly price within 1 to 3 months and people fell for it. Then there are the people with property portfolio's, there to blame as well. From what I am hearing those people are becoming very worried.

[BLACKWINGEDBEING]

Great real info!!!!

[mikeybrumbrum]

AND.. isnt it the same as us, the peopel, since we are the ones who are payng this "bail out" fee, paying MORE for all our mortgages ??

Its a con, and ht epeopel who made the con, should be brought to justice !!!!

[bacaca88]

Just get ur credit card out as normal. Stop worryin. Can always pay next month. Who needs cash? Get on the dole and enjoy life. Its what you all deserve in Uk for fucking the place up.

[mikeybrumbrum]

They lent LOTS of money so that house prices would increase dramaticaly.

Then, they sold people "EQUITY RELEASE", so that they could BUY half yur house off you. NOW, they say there is a crisis, so the house price will fall - SOON they will own your WHOLE house (or anyone who had equity release, anyway).

So, WHO is gonna bail me out of my "equity release" problems, which could lead to me losing the WHOLE of my house, to these bankers ??

NO oNE, thats who !

NOOOOOOOOOOOOOOOOO !!!

[dojufitz]

He makes some good points here - thanks for talking slower in this one - others are like manic talk SPEED!! lol...

[migrane222]

If this guy is correct, then watch e*trade (ETFC). See if its rally starts to roll over. It is one of the few banks he mentions by name in his posts, and though he doesn't say it directly, he obviously thinks its doomed.

[freddytuber]

How come they just now posted good earnings and even raised dividends? Are they lying?

[migrane222]

First the earnings were terrible, but they did beat expectations, and for pps that's all that matters. In fact, the financials probably will continue to rally. The point he is making is that we are between storms and the next one is bigger and about to pick up momentum.

[javawhz]

spot on!! terrific information, thanks!

[nasafiyel]

Dude, seriously, you are the man! GREAT INFORMATION!!!!

[louis12346]

34.) Everything in the "United States" is For Sale: roads, bridges, schools, hospitals, water, prisons airports etc. I wonder who bought Klamath Lake? Did anyone take the time to check? (Executive Order 12803)

35.) We are Human capital. (Executive Order 13037)

36.) The UN has financed the operations of the United States government for over 50 years and now owns every man, women and child in America. The UN also holds all of the Land in America in Fee Simple.

[zacheh]

wow, this is one of the most alarming pieces I've seen about Alt A's. I enjoyed being able to see the actual figures. Great work on all your videos.

[GreenrushCapital]

Great vids Mr. Mortgage...

[scott715]

let the chips fall

NO BAILOUTS!

[MaverickCentricity]

A detailed level of analysis rarely seen on Youtube. Thanks for the service. Keep up the good work.

[navtel]

like bill cosby said to old weird harold when they were out past 10 and had to cross over the 9th street bridge, ' oh harold, we're in trouble.' anyone that ignore the warnings will wish they hadn't.

[6thStreetProductions]

Thanks for the information.

[badonkadonk34]

Ok - this is a first. I have never seen a video with 500 ratings of all five stars with almost 30K views. Great job Mr. Mortgage - keep it up.

[KoroOutbreak]

Hey Mr. Mortgage, would you compare the current mortgage crisis to the fallout of the Savings & Loan scandal of the 80's? Are there any similarities at all?

[markmti]

this problem will turn out to make that look like a good thing. There we too many S&Ls then anyway. Just think about Bear Stearns collapsing in 24 hours. That is much more significant than a bunch of local s&l's.

[Ambiepants08]

Thanks, Mr. Mortgage. Good info. The only thing is I think you might be overestimating the good great / financial standing of these Alt-A borrowers. If they really had $200k in the bank and great credit as you state they do - they would have gotten a prime loan and not Alt-A, correct? I look forward to seeing your other videos. Cheers.

[renegaderealtor]

Dude...I just heard that ForeclsoureRadar put out that Cali crossed 1,000 foreclosure auctions a day this month...just like you said.

This is just SICK considering that you predicted this back in March/April. And the Alt-A nightmare hasn't hit?

Why don't we hear more from you? You've got a LOT to contribute and I would watch your show every dang day if you posted that often. I already got your channel set up to auto download and convert to my iPod.

[markmti]

very few people want to hear the truth. they rather drink the kool-aid and have the truth hit them upside the head.

[harley1932]

A few years ago, I saw people with no investment experience go out and buy homes for rentals in California. The market was white hot at the time and they planned to sell in few years. They funded most of the properties with HELOCS and HELS from their primary home. They are now not only negative cash flowing, but they have negative equity. Something has to give. These folks are going to have to implode before the market comes back.

Mr.Mortgage, will govt. bailouts help these speculators?

[harley1932]

Thank you Mr. Mortgage for giving detail to something I have been saying for a while now. I have been calling it The Next Wave (the first being the subprime). I see a mountain of people with some a little savings and higher credit scores who went crazy with the HELOCS and HELs. They have been able to tread water longer than the subprime group, but I know they can't keep it up for long. You put the numbers to my theory--very good.

[markmti]

the alt-a implosion will make the subprime implosion look like a walk in the park.

[TexnTuber]

Alt-A: another well-engineered, thought-out silent weapon in a quiet war (against the middle class)

[markmti]

thats rather tin-foiley of you, but in the end that is what happened.

[TexnTuber]

you ain't seen nothing yet, pal

[androydnyc]

what kind of monthly production did your shop do?

what kind of product- were you an Alt-A shop?

you were on a trading desk- did you ever deal with secondary brokers?

any on the east coast- Jersey City to be precise?

i was on a whole Loan desk at a major institutional broking house- dealt with portfolios and new originations.

only innocent vics are the taxpayers and the pensioners holding slice & dice CDOs that turned the B piece into A paper.

you know the CW about Mo calling the negam borrowers?

[ThatHawaiiGuy]

Good stuff.

[KittenNeedsaMAN]

From having been in the know, great info. Who allowed it? The Lobby, like health care, oil, military industrial complex, etc., etc., etc...

[Tinker2e]

I know...but how and who allowed it? I have a gut feeling that this will go all the way to the top. Or should I say "even further" to the top.

[Tinker2e]

I will go further to say that I think that the Bush admistration had something to do with this. There were laws on the books to combat just this type of defalt that were completely ignored.

[markmti]

it was all the investment banks allowed to do whatever they wished and break the law for many years without any oversight. There are laws governing them, they simple choose minutely to ignore them.

[kkernahan]

Mr Mtg,

I think some of your assumptions are way off. Im not arguing with the data, but the buyer characteristics. The key componenet for this exercise is jobs. The 700 credit score guy (like me) is not going to walk away from his house because he has negative equity. Hes going to ride it out because hes got a steady job, and supports a family. The other component is rates. If rates go up like I think they might after the election, then we have a problem.

[markmti]

countrywide are the first popping of course because they have the lowest max neg cap.

[luckyrateman]

option arm's don't double their payments. The payments recast after 5 years, some in 10 years. If the borrower started at a payment rate of 1.5%, that payment could double in 5 years. The mortgage mess was magnified only because of the declinging values. Plain and simple. What happened between 2001-2005 when all those mortgage broker were making mucho dinero as real estate appreciated 10-20% per year? Its when the music stopped that all these issues were magnified.

[markmti]

all the countrywide loans that are hard recasting right now are doing so because they are hitting the 110% max neg cap. Given a 3.75% MTA on top of a 3.5 to 4% margin on a 1.25% payment rate, the payments double AT LEAST.

[Tinker2e]

Oh si si...but the music always stops! This bubble was continued on much due to Countrywide. I had thought we were at the top of the real estate market in 2000... but in 2001 Countrywide gave a buyer a loan when he only made 40K per year on a 470K home with a no doc loan...I thought I was dumb. I could not understand how that could happen. Well I guess I was not the dumb one.

[molagingo]

Lot's of good information here, but one other thing that needs to be considered is the job market. Many people are losing there jobs or worried they might get laid off. Also, many people are having there hours cut or making much less at their jobs, commissioned sales people getting killed. Who's going to want to purchase a home under these conditions?

[markmti]

right...now that all the exotic loan programs are gone, interest rates, jobs and the overall economy will once again frive prices like it has for the past hundred years.

[caryc108]

Wish the main stream media would present the real story

[stinkypoon]

Somewhere between 4:40 and 5:00, my blood started to boil. I was already deeply angered by the prospect that these people might be bailed out, but I had no idea so many had cashed out. Just being able to walk away from that debt is reward enough.

[markmti]

isnt that a killer...50%+ of all subprime and alt-a loans were cash out. So, they get paid TWICE!

[justjacqueline2004]

I thought the European banks just said this was ALL over,looks like just starting-scarrrrry!

[stinkypoon]

They always say it's over. Keep the market volatile, produce a few rallies that'll shake around the share prices, and make quick bets. Somebody has to win in this game. That Lehman has so emphatically denied they're in any serious trouble leads me to believe they'll be the real "surprise" when their books are exposed.

[IndyLew]

Fabulous job on all counts: concise, fact filled, well stated, semi-conversational.

Scary, too. Top quality.

[jdcremin]

It would be awesome if you could tell me exactly, EXACTLY, what a "write-down" is.

[markmti]

write down is where a financial institution has an asset (real estate loan as a simple example) that is booked at $100k but really only worth $50k for any variety of reasons.

[jdcremin]

Thanks, I wish the media wouldn't use economic slang.

[jvent68]

The Alt A crash will make the so called "subprime crisis" look like a walk in the park

[eyewitness043]

Exactly. I'm trying to get my poor oprah addicted wife to understand that we can rent the house next door that won't sell, and pay 50% less per month to live.

The people who are stuck on trying to 'hold on' are gonna be hurtin...

There is no greater slave than the one who belives he/she is free.

[bagsauce]

The remainder of this year is going to be easy compared with what this country is facing in 2009-2010.

[markmti]

Hey Stray...get the word out my man because you are headed right down our path. Your incomes have not increased 35% inflation adjusted if I am not mistaken.

[bdc03]

Even Obama said this is the 1st time wages were increased and they went down by inflation.

[fleck321]

is rasoros serious? scary if so.

mr mortgage: great stuff. pls keep it up.

may i ask which other banks and brokers in your opinion are as exposed to bad mortgage loans/bonds/helocs as citigroup, bank of america, well fargo, downey savings, lehman and merrill?

[straydoggio]

Mr Mortgage - we like your stuff even in England - your analysis of the US situation.

UK is still in denial. Houses cost 6 to 8 times average income.

$400,000 would only buy you some ugly slavebox which no American would ever live in.

House prices have increased 300% over last 10 years where salarties only increased 35%.

The sheeple have no idea of what's coming - but things are starting to bite now... and we're gonna get it worse than USA for England's biggest house price crash.

[rasoros]

Goldilocks is back and the economy is booming. Alt-a is not a problem anymore. I just borrowing 98% against my home and will spend it on a trip to Hawaii, a new plasma tv and two new cars. If things turn sideways on me then no worries, congress has my back covered.

[bdc03]

wow psychotic.

[kmrundle]

nice work, keep em coming~

[Nassos1983]

I had no idea of what ALT-A is all about, since in Europe we don't have such "products".

But, man, almost 100% Negative Equity? From your analysis I conclude that the US economy is not in a recession, but in real trouble!

[brownsthenewwhite]

Hey Mr. Mortgage, great job. Thanks for the top rate analysis! :)

[brownsthenewwhite]

Hey Mr. Mortgage, great job. Thanks for the top rate analysis! :)

[quagles]

After I saw this video I went and watched all the rest of your videos and I think you're rly interesting. Keep it up man.

[glacierroast]

Follow the money trail of these people knocking mr. Mortgage...would be interesting to see where it leads you.

I would wager a pretty good guess.

Nice Job- keep up the good work Mr. Mortgage, you the man!

[mortgagetrader]

(continued) products, wasn;t so difficult. After all, buyer and seller alike knew what the payments would be each and every month for the term of the loan.

Along comes Mr. Mortgage and friends with their Alt-A, variables, and option products. Easy to sell, since the payments during the intro period are next to nothing, and in some cases, heck, if you want to skip a payment now and then, that's cool with us!

Now, build the finacial model to value these loans. Not so easy ...(continued)

[markmti]

it wasn't about the individual products, it was about the perceived reduction in risk when the risky loans were combined with non-risky loans and securitzed. An ALT-A 100% stated income loan priced at 7.5% 3 years ago would have been fine. But, 4.5% wasn't. The IB's, in cenert with the raters got to aggressive in pricing. If it looks like a AAA, walks like a AAA, clients think it is AAA then price it like AAA. Risk can always be mitigated with price. The investment banks got greedy. Period.

[mortgagetrader]

Oh my! Dorothy is back with another video of forthcoming gloom and doom. The thing is, Dorothy has strayed off the Yellow Brick Road and is wandering further away, rather than closer to, the WoO.

Question for Dorothy... seems that your nose is pointing off to the right, our right, your left. How'd that happen? Get hit in the face by a flying monkey or two?

Anyway, let's get back to RISK MANAGEMENT, or lack thereof. How does everyone value MBS? Well, with the "old" fixed (continued)

[markmti]

hey dickhead, I will keep your posts up here and even respond to you because some of what you say is valid but no personal insults. It makes you look ignorant and makes me want to kick your ass. Now proceed please.

[mortgagetrader]

Hey Dorothy, lighten up will you? First off, there are 15 people who have earned the right to call me "dickhead" and you aren't one of them. The other 4 managing partners of our firm, and the 11 men & women on my team, who can call me "Mr. Dickhead". It all started back at the IB when we announced we were leaving to start our own PE, and this one guy... kinda looked like you if you shaved your head, called me "dickhead" when we didn't take him with us. He didn't know how to manage risk (cont)

[stinkypoon]

What's the matter, dickhead? (I don't care whether I've earned the right to call you that) Wouldn't your time be more productive if you were back to busing tables like your brethren conmen in the industry? You're angry that somebody is showing the dirty underlying facts, but have nothing to counter it other than personal attacks. Everybody with half a brain knows what is going to happen, and I comment Mr. Mortgage for showing the details.

[mortgagetrader]

(cont) either. We call him "Mr. Potatohead" these days. Last I heard, he peddling mutual funds in Indiana. Couldn't handle the RISK in RM.

OK, let try and get back on track now. So you guys go out and sell complex mortgage products on Jane & John Q Public, who haven't got a clue as to what their payment obligations will be after the intro period, right? Heck, you guys who sell the crap don't know either. Then you float it up the river, with some kind of made up value. (cont)

[mayr12]

The line between subprime and Alt-A as you can see is very gray, I wonder how many write downs have included Alt-A securities as well.

[markmti]

You are right, from 2005 to mid-2007 everything just kind of blended together didn't it. I remember in 2006 everyone just used the program names and never said prime, alt-a, suprime.

[mayr12]

It was more about lenders marketing their products to brokers rather than classifying borrowers based on their credit worthiness on the front end of the business model. Terms like "Express" "Pro Series" "Gold", exc. were all terms used to blur the line and everything else was straightened out in secondary when it was packaged and securitized. If it looked AAA, it was sold that way. I did see where Citi included 1 billion in Alt-A in their most recent write downs. I'm sure there will be more.

[mayr12]

Thanks for this. I was a wholesaler of Alt-A/Subprime/and a bit of prime for a little over 5yrs. I've been saying the Alt-A shoe has the potential to drop for a long time now. The big lynch pin here is how many of these borrowers will decide to walk. That number is being watched very closely. The other big question here is how much of the asset depriciation has already been priced into the market. cont.

[badonkadonk34]

Great Job. A lot of great info. Do you have a pay pal set up for the effort? Please keep up the good work.

[joseney21]

who says prices start to stabalize in two or three years?? If they do, who is to say this won't start another decline in prices?

Great vid, thanks for sharing

[rocckstarr1]

While I see the similarities and certainly see the differences. These people presumably have jobs and are not living on the east side of cleveland. I believe that they won't run out of their homes and are more likely to call the lender & work something out. These people are more educated, higher income earners and presumeably have more resources to deal with the equity loss. Also they have the benefit of time. This Alt-A crisis comes later in the bust cycle where prices start to stabilize.

[markmti]

being $200k upside down in a home and making payments twice that of what you can rent a similar home for in the same neighborhood is quite a compelling reason to bail.

[rocckstarr1]

Mark. Agreed...I isn't a pretty scenario. I would recommend it to anyone who couldn't afford the payments. The other side of this which I am seeing locally is that the vultures are starting to pick up properties in foreclosures and pre-foreclosure short sales. So you are right it needs to be addressed and when banks fully decide that some $ is better than the black hole of foreclosure we may see some stemming of this possible new crisis OR I expect to see you as a Paulson-like Billionaire!

[codediporpal]

excellent. I've got to ask though... you say it's emergency and needs to be addressed? In what way?

[markmti]

stopping 50% of the loans in CA from going into default and losing the banks in the process.

[cumfiesta69]

I put everyone into a option arm and tell them to just make the minimum payment. Thanks for the 3 points on back beotches.

[Josephastat]

BIGGEST difference,

AltA loans will reset and are resetting to LOWER rates. That's right! LIBOR is down, and many/most AltA ARMs are resetting to a flat or lower rate and lower payment. Bother Treasury and LIBOR indexed ARMs are cheaper now than the so-called "teaser" rates during the initial 3 or 5 year fixed period of the ARM

[markmti]

you should start doing hard money loans with all that cash you saved up Ed - you can make a fortune!

[markmti]

LIBOR maybe down right now, but chances are it will nto stay that way. Also, they are trying to make that case for subprime but remember, when you go from a 7.95% interest only to a 7.95% full amortized payment there is quit the payment shock. Also, resets are only part of the story if you had been paying attention. Negative equity is the leading cause of loan default and not payment adjustments. Negative equity cuts across all borrower types.

[easy2ed]

I've been following your vidio,s and comments for the past couple of weeks. And believe it's a bredth of fresh air to hear the truth again. I'm 66 with no debt what so ever, went into retirement with that idea. So far it's worked out well. Also believe this country is in serious trouble even without the market meltdown. Thanks for telling us the real skinny on the mortgage market. Keep up the solid work on upcoming events. Ed

[anhsupra]

excellent excellent explanation of the pending alt-a crisis. thank you sir.

[111harley111]

Keep em coming. 5 stars.

[wcoeqpk862]

ran out of letters to use in my text haha. anywase i subscribed to your blog and its awesome (highly advise getting on the email list). but when do you see this alt-a thing collapsing (assuming the latter part of 08 beginning of 09) and what do you think could possibly be done to prevent a financial implosion?

[wcoeqpk862]

saw someones post of you on CNN with glen beck. nice going (although i think hes sorta a radical that just blabbers off his rear all day). how you get that jig though of curiousity (darn good regardless). i highly share your view though and have seen all of your videos and agree 100%. im short LEH and i think they are being the most deceptive of em all and i have a feeling if i hold my postion its going to give me a return of 50% from its current position. when you see this colapsing anyhow?

[JerryE1961]

We're freakin doomed!!!

[GoldFever44]

Thank you sir....great stuff...very informative. Keep up the great work!

[rsmith786786]

Great analytic piece.All the viewer's should call their congressman.

The sad part is Bank's and Investment Banks have not learned anything from this.They think that they can get away b/c of Stupid Bernanke and Hank Paulson. Rsmith786786

[jcwaliski]

Very good hard data analysis. It's a shame that the "bubbleonians" on CNBS keep parroting the end of subprime (appetizer), yet they fail to see everything else credit -related (the main course being Option ARMS/HELOC/CC debt). I am a big believer in the TED spread, and it is pointing to more pain to come. The fact that we are still over 10K on the DJIA is shocking. Do these people really believe that things will magically recover to '06 levels in 2H 2008, or are they just propping things up?

[markmti]

the TED spread maybe jumping tomorrow if that story that broke in the journal is true. By 30bps on the short end!

[iam420king]

"such as Lehman"

lmao. Well done, sir.

[kahunabear]

The data do not lie!

[markmti]

Nope...THE DATA DO NOT LIE!

[uclaztec2]

Honestly, this is probably one of the most informative videos I have seen this year. Thank you Mr. Mortgage, you're doing god's work.

[markmti]

Bless you child.

[txteamtech]

WOW

[seabassbanker]

they are taking care of it... big ben is taking AAA mortgage paper on the feds balance sheet... These banks can hide the crap until the cash flow dries up (Level III for IB's), that is what WFC just did, WB did that last(banks have slightly different acct rules) Q... what scares me is if a bank or IB has AAA paper on deposit w/ the fed and the cash flow dries up, will they print up the cash flow to prevent the default or make the bank figure it out???