It was another week of excruciating bad news for subprime giant
Household International. Not only is its stock continuing to flounder (short sellers are all over it), but some
analysts are starting to rethink their views on the company. In a research note released late on Friday Salomon Smith Barney analyst Matt Vetto notes that "Household shares trade near all-time trough valuations. We expect the overhang of regulatory/litigation matters to weigh on the stock near-term." A (supposedly) confidential Washington State report on Household's alleged predatory lending practices leaked out and is now available by visiting the website of the Bellingham HREF="http://www.bellinghamherald.com/"> Herald at. The report is damning, to say the least, and names names at Household. Regulators also reveal that one of Household's affiliates was apparently producing loans for credit card giant MBNA...
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Meanwhile, Household said it would soon return to the debt markets. Its auditor has finished scrubbing its books for the past three years. Chances are that given all the bad news its cost to borrow in the capital markets will rise...
For the past year the great debate in housing finance (and housing) circles has been: "Are we looking at a housing bubble in the U.S.?" Good question. Let's get a few things straight. First off, no one will know it's a bubble until it actually happens. Some are comparing it to the tech stock market bubble. But what's the difference between owning shares in a "dot-com" as opposed to owning a house? You can actually live in a house or rent it out. A house produces cash flow in terms of rent. A share of stock (today, at least) often yields misery. That said, if there is a bubble the higher priced homes, also known as the "carriage trade", could suffer the most...
Commercial mortgage lenders take note: construction of office buildings nationwide fell 43% for the first six months of the year. San Francisco suffered the worst decline of any major city: 97%. SF also has an acute affordable housing crisis. Maybe they should convert those empty offices into residential condos. A crazy idea? No crazier than converting old factory and warehouse space in SoHo (NYC) into living quarters...
Former HUD secretary Andrew Cuomo (Clinton Adms.) recently spent a night in a New York homeless shelter. Mr. Cuomo, who is running in the Democratic primary for governor of New York state, wants to use state pension fund money to create housing. He also wants to create a state-funded land bank. His father is former New York governor Mario Cuomo...
According to the Quarterly Data Report, the top subprime wholesaler in the second quarter was Option One , followed by New Century. The top subprime retail lender was CitiFinancial. The top conventional retailer was Wells Fargo...
IN CASE YOU MISSED IT: Insiders at publicly-traded home building companies have been cashing out big time this year. Through July insiders sold a record $336 million worth of stock while buying just $2 million worth of stock in their firms. Could this be a sign of a market top?
AND FINALLY: In the second quarter the entire thrift industry earned $2.86 billion while Fannie Mae and Freddie Mac, together, earned $2.57 billion. Almost $1 billion of the thrift industry's second quarter earnings belong to Washington Mutual.
