The Flip Board

HSBC has done well to style itself the great subprime survivor. But the world’s biggest bank is less special than it thinks. True, its shares have outperformed almost every banking index around. And its core tier one capital ratio – 7.8 per cent at the end of September, towards the top of its target range – is on the high side, versus western peers.

But as HSBC has three-quarters of its loan book in the benighted US and UK, that target may be a moving one. A note to third-quarter accounts shows that the carrying value of US consumer loans was $111bn, but that the market value was $34bn lower. Fine: these are banking assets, not held for trading, so the group does not have to account for them at fair value. But if you were to tot up HSBC’s subprime losses taken so far through its P&L, then add the reported fair-value deficits not recognised on balance sheet, the sum would be almost $70bn – higher than Merrill, Citi or UBS, and second only to Wachovia. An accounting confection, of course, but it does throw a light on the scale of HSBC’s exposure to US subprime and the potential for further impairments.

- Lex - www.TheFlipBoard.com

WASHINGTON (MarketWatch) — Mortgage-finance giant Fannie Mae reported a much wider-than-expected first-quarter loss of $2.2 billion, as credit-related expenses took a bite out of its bottom line, and said it’s planning to raise $6 billion in new capital and cut its dividend.

Fannie Mae said fair value losses and credit-related expenses due to adverse market conditions hit its first-quarter earnings. The planned new capital, Fannie Mae said, will enable the company to “maintain a strong, conservative balance sheet, enhance long-term shareholder value and provide stability to the secondary mortgage market.”

As a result of the capital plan, Fannie Mae’s federal regulator said it is reducing the company’s capital surplus requirement to 15% from 20% once Fannie raises the money.

Fannie’s Chief Executive Officer Daniel Mudd said the first quarter saw heightened volatility in the secondary mortgage market, credit spreads that hit 22-year highs and a faster-than-expected drop in home prices.

“Our first-quarter results, although an improvement over the last quarter, reflect these challenging market conditions,” Mudd said. Meanwhile, Fannie Mae’s mortgage credit book of business grew by 3% in the quarter, to $3 trillion.

Last week, Mudd said he doesn’t expect a real recovery in the U.S. housing market before 2010.

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 This falls in line with exactly what we have been preaching for the last 6 months. (3 months for this blog)  We have already started the “bottoming process”. This is evident by large mortgage-financing companies missing earning as they simply cannot hide the numbers within their books and financial documents anymore.  Watch as investors start grabbing fantastic deals from desperate sellers late this year.  We hope you are one of them!

Mortgage Rates Climb as Housing Grasps For Recovery

By Jeff Cox, Special to CNBC.com | 03 Apr 2008 | 11:33 AM ET

Mortgage rates edged upward over the past week, despite the Federal Reserve’s aggressive cost-cutting measures and Wall Street’s eagerness to get past the housing crisis.

AP

A 30-year fixed-rate mortgage now costs 5.88 percent, up slightly from last week’s 5.85 percent, according to Freddie Mac, the second-largest US provider of home loan financing.

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Experts say it is in everyone’s interest to settle these loans, but doing so is not always easy. Consider Randy and Dawn McLain of Phoenix.

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NEW YORK (AP) — Just four days after Bear Stearns Chief Executive Alan Schwartz assured Wall Street that his company was not in trouble, he was forced on Sunday to sell the investment bank to

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I’m at the point now where I honestly can’t keep track of all the foreclosure fix proposals out there right now. Today we got a few more.

One is from the National Community Reinvestment Coalition, which, in what it calls a “market-driven plan,” wants the government to buy loan pools at a discount and then sell those same loans back to Wall Street, again with the discount and also after they’ve been “modified.” Of course this begs the question: Does Wall Street want them back?

Then there was the email from the Chairman of the House Financial Services Committee, Barney Frank, who is introducing legislation today that would allow the FHA to insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders.

While nobody wants to use the words “government bailout,” most especially Treasury Secretary Hank Paulson, these programs all require government money for a time at least. And these proposals are on top of Paulson’s teaser freezer plan, where banks and lenders are supposedly freezing some of the adjustable rates on some of the troubled subprime mortgages.

This is on top of Countrywide’s deal with Boston-based NACA which is supposedly modifying many many loans on a case by case basis, on top of umpteen other lenders supposedly doing the same thing, and on top of FHA Secure which was the president’s plan to allow more folks to refinance into FHA loans, even if their loans are delinquent.

You would think we wouldn’t have any foreclosures at all these days, given all the plans, but California-based RealtyTrac reported today that foreclosure filings in February were up 60% from a year ago, and a year ago they were pretty darned high already.

Here’s the rub: So many troubled borrowers don’t qualify for so many of these plans. So many don’t contact their lenders about potential fixes. So many can’t even afford the modifications. So many don’t actually want their loans fixed because they have negative equity in their homes, and they’d prefer to walk away. So many fixes. 

NEW YORK (MarketWatch) — In the latest sign of mortgage-industry retrenchment by a major U.S. bank, Citigroup said Thursday it will reduce its mortgage assets by $45 billion over the next 12 months.

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