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Tuesday, February 26, 2008


walking away cont'd.

the phenomena of mortgagors walking off their purchased properties -- the quaintly euphemized "jingle mail" -- has been a hot topic in residential real estate circles. but there has been considerable debate as to whether it is really happening.

we may now be getting unfortunate clarity on the issue. housing wire highlights this commentary, which cites mish.

GEA poses an interesting question as to whether the FICO system has lost its mind or if maybe there’s a larger issue at work. Although it’s hard to imagine borrowers with a 20%+ equity stake (albeit phantom like) and strong credit scores defaulting at a rate that would lead any servicing portfolio manager to jump out of the nearest window, the numbers seem to indicate that borrowers may be walking away when they are 30 or 60 days delinquent, not even waiting for foreclosure. In December 2007, the 90 days delinquent category stood at 3.79%. Even if every one of these delinquencies became a foreclosure, the figure should only double to 7.58% in January. Instead, the foreclosure figure is 13.17%.

What does it all mean? Until recently, I may have been one of the last holdouts on the FICO bandwagon. I’ve seen enough delinquency reports to make me believe in the ability of FICO to accurately predict performance. But something is terribly wrong with this picture. Credit scores north of 700 have not, in my experience, shown such poor performance levels so quickly. ...

If there was ever a doubt that the phenomenon recently dubbed as “jingle mail” actually exists, wonder no more. It’s alive and well. Hopefully, it won’t be still be around around come Christmas time. But given the recent trends, that may be wishful thinking.

meanwhile, the data coming in is having its effect in the ABX indeces.

I've seen a summary of the ABX Remittance Reports (not public), and as one Investment Bank wrote, as they increased their loss projections again: "Another month of disappointing data ..."

in my earlier take, i said:

it's no secret that personal responsibility, interconnectedness and identification with common institutional aims has been on the wane in the west -- on both sides of the civil equation. the business of institutional lending, particularly, has developed into a commodity that is managed not by intimate knowledge of counterparties and two-way character evaluation but by statistical distillations of rates of return on the one hand and presumed protections of government on the other. now, with neither impersonal evalutation holding up under scrutiny and stress, models which operate on presumptions of the old relationships still being in place are breaking down -- with fear, anger, loss and a deepening reinforcement of irony, disillusionment and defeated apathy the widespread result.

i've sometimes called the american boomers the most destructively narcissistic generation to walk the earth since the decadence of the romans -- the type represents the essence of western social collapse in my view.

but jim jubak in this video nails down one of the most material undercurrents of the entire crisis -- it's time for the profligate and irresponsible boomers to finally reap some of what they have sown. a pity that their leadership (or lack thereof) led the western world down this dark path, but the consequences have become unavoidable.

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great video gm. I always learn something on this page.

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I'm personally very worried that in the coming years, while the Boomers have exhibited no ability to exercise good judgement and leadership, they will likely prove themselves dangerously good at exercising political power for personal gain.

Some optimists have suggested that they would never wage such a war on their children. I'm not so sure, and the evidence thus far give me little hope.

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