[Editors Note: Rob Chrisman is on a cycling vacation this week so he's asked some guest writers to step in on DailyBasis. Today, we start with mortgage banking vet Steve Emory.] The press still talks about how loans with stated income or 100% financing were the root of our problems. But subprime has been gone [...]

The mortgage industry melted down August 2007, then whole financial world melted down September 2008. The Subprime Primer, a hilarious powerpoint chronicle of the crisis, made the rounds back then. I just stumbled across it, and I’ll repeat what I said at the time: Of all the deep analysis of the subprime crisis, this is [...]

A few weeks before the darkest days of the financial crisis in September 2008, economist Nouriel Roubini said: “we have a subprime financial system, not a subprime mortgage market.” Then the wheels came off: Fannie and Freddie overtaken by Treasury, Lehman failed, Merrill overtaken by BofA, WAMU overtaken by Chase, Wachovia overtaken by Wells, AIG [...]

Strategic Defaults Today A recent Barclays report (via HousingWire) said: “Most popular studies overestimate the level of strategic mortgage defaults. We think that the strongest cases of active strategic defaults are less than 1% of total defaults. These borrowers are clearly capable of making mortgage payments, always remain current on all non-mortgage debts and actively [...]

Before presenting rate predictions for 2011, it’s worth noting that all forecasts are subject to the whims of highly volatile rate markets. What follows is an explanation of how rate markets work, how rates have behaved since the financial crisis began in 2007, then the outlook for this year. All rates discussed are 30yr fixed [...]

In a recent report, the Federal Reserve Bank of San Francisco said low interest rates, lax lending standards, the proliferation of exotic mortgage products, and the growth of a global market for securitized loans promoted increased U.S. household leverage (as measured by the ratio of debt to disposable income) to an all-time high of 130% [...]

This unsolicited promo email is floating around in many mortgage lenders’ inboxes today. It explains a lot about the past few years, and portends an ongoing boom and bust routine. Click image for full size.

Markets Don’t Know What To Do If you’re a trader, running a position and inclined to make occasional knee-jerk buy/sell decisions based on economic news, what would you have done yesterday with these headlines: Producer Prices show inflation is less than expected, Industrial Production rose 0.5% in October, the most in three months, Capacity Utilization [...]

Moody’s Cuts Greece To Junk Moody’s cut Greece’s credit ratings to junk status (Ba1). Greece has been downgraded to non investment grade and Spain cannot seem to find any funding to rescue its savings banks. Of course, the rate on any fixed income security tied to Europe has gone up to compensate investors for the [...]

Subprime Investment Comeback? As an investor would you rather own IBM or Pepsi stock, or subprime loans? Think hard… and buy them while you can? Apparently, subprime loans are making a comeback (investing, not originating). Remember that these older subprime loans are like old cars: the new ones are better, but the old ones that [...]