$19 billion in mortgage loan losses for WaMu

Tuesday Sept 23, 2008 Best-Mortgage-Companies.com Investors turned nervous again on Monday, Sept. 22, when they pushed WaMu shares down 20%, to $3. The bank’s stocks got hit on fears that President George W. Bush's $700 billion bailout of troubled mortgage assets might not be a good thing for banks if they are forced to recognize even larger losses on their mortgage holdings. The bank is anticipating $19 billion in mortgage losses during this crisis. Analysts say the losses could go as high as $28 billion. The uncertain company’s future continues to put a strain on the bank's customers, who are moving their deposits to other banks just to be safe. Its deposits from retail customers were down nearly $6 billion from last year by the end of June, even as the bank offered attractive rates to lure deposits.

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Lehman Brothers' Failure Pushes Central Banks To Inject Money Into The Credit Markets

Thu Sept 18, 2008 Best-Mortgage-Companies.com Lehman Brothers, which used to be an innovator in global finance and served the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide, has failed. Its headquarters are in New York, with regional offices in London and Tokyo. Founded in 1850, Lehman Brothers had maintained leadership in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity. Inter-bank lending ground to a virtual halt as banks grew increasingly wary of lending to each other after the investment bank failed. The news pushed central banks to boost liquidity. The world's biggest central banks moved Thursday to inject massive amounts of liquidity into the financial system in a bid to alleviate extreme distress caused by the collapse in short-term. The Fed provided additional $180 billion for short-term dollar auctions. Lehman's bankruptcy is the largest failure of an investment bank since Drexel Burnham Lambert collapsed amid fraud allegations 18 years ago.

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Troubled Mortgage Company Up For Auction

Thu Sept 18, 2008 Best-Mortgage-Companies.com Washington Mutual, the nation's largest thrift, has put itself up for sale, the New York Times reported on Wednesday Sept 17, 2008. Goldman Sachs, which was been hired to advise the troubled mortgage company, started the auction several days ago. Potential buyers include Citigroup, HSBC, JP Morgan Chase and wells Fargo, said the New York Times. Washington Mutual’ s shares fell 13% to $2.01. The stock rallied 11% to $2.23 during after-hours action.

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Reviewing Mortgage Backed Securities’ policies

Sept 13,2008 Best-Mortgage-Companies.com Freddie Mac and Fannie Mae bailout by the Government accomplished one part of the hoped-for effect: longer term mortgage rates plunged to levels not seen for months. At the same time four U.S. Senators proposed a freeze of foreclosures on mortgages held by the companies for 90 days and immediate action to assist homeowners by modifying delinquent loans. Even though Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have encouraged lenders and loan servicers to facilitate such modifications neither Freddie nor Fannie have gone as far as many private lenders in doing so. A foreclosed mortgage usually pays the lender $0.30 on the dollar but a mortgage that is modified so as to be affordable for the borrower pays nearly $0.90. The Senators asked that the GSEs review their policies governing loans involving Mortgage Backed Securities in order to keep families in their homes and maximize the value of these assets. The proposed changes would also reduce risks to taxpayers and alleviate the downward pressure on house prices.

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Beyond the subprime mortgage crisis: Alt-A loans

Sept 03 08 Best-Mortgage-Companies.com Alt-A mortgages were designed for people with good credit who could not document their income — people like the self-employed. Not as risky as subprime loans but not quite prime either, Alt-As are part of what’s causing trouble for Fannie Mae and Freddie Mac. About half of their combined $3.1 billion loss in the second quarter came from bad Alt-A loans.Part of the problem is that many of these loans, like the riskier subprime mortgages, went to people who never should have gotten them. Not self-employed, maybe not employed at all. Now there are worries that Alt-A loans may cause another wave of defaults beyond the subprime mortgage crisis. Entrepreneurs who took out Alt-A mortgages may be hit when their rates reset -- jeopardizing their homes while the ailing economy is killing their businesses. Also, small business owners with good credit may not be able to get Alt-A loans because many people abused them by lying about their income and banks get nervous about lending to people who have trouble documenting their income.

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