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Fitch Makes Rating Cut

The economy continues to slide downward today, with the Primary results showing an economic beating.  Fitch has further modified it’s ratings:

 “Fitch placed MBIA’s ‘AAA’ Insurer Financial Strength (IFS) on Rating Watch Negative following Fitch’s announcement that it will be updating certain modeling assumptions in its ongoing analysis of the financial guaranty industry.”

With MBIA being cut to rating watch negative, it’s likely that the housing market will continue to suffer.  This means it will be harder to get a loan, so those in need may wish to pursue mortgage acceleration.

February 6, 2008 | Filed Under Uncategorized | Leave a Comment 

The $100 Billion Bailout Fund

Further outcries are being seen regarding the disastrous response to the housing crisis.  Counterpunch editorializes:

Friday’s bloodbath on Wall Street proved that the troubles in the credit markets have not been relieved by the Fed’s rate cuts. The Dow Jones slipped 367 points on the 20th anniversary of Black Monday, the stock market’s biggest one-day loss in history. Since Friday, Asian markets have plunged; stocks are down sharply in Japan, Australia, Hong Kong, Indonesia, the Philippines, Taiwan and South Korea. The global sell-off is a reaction to ongoing problems in the subprime market and deeper-rooted systemic issues related to the US’s structured-debt model.

The sudden downturn in the stock market provided a fitting backdrop for Treasury Secretary Paulson’s appearance at the G-7 meetings in Washington DC. Paulson has largely shrugged off the decline in housing and the growing volatility in the equities markets. As the representative for the world’s biggest economy, Paulson instructed the other nations on how best to adjust their currencies and on the dangers of “sovereign wealth funds”. No one was listening. Foreign ministers and central bankers are less receptive to the scolding of US officials. America needs to put its own house in order before it gives advice to anyone else.

What everyone at the meetings really wanted to know was why the United States destabilized the global economic system by selling hundreds of billions of dollars of worthless mortgage-backed securities to banks and pension funds around the world? Aren’t there any regulators in the US anymore?

Sadly it would appear that the bad markets fueled by mortgage acceleration and foreclosure has destroyed most of the hope for the US economy.  Trust in American holdings is at an all time low, and other nations are withdrawing from US markets.

October 23, 2007 | Filed Under Uncategorized | Leave a Comment 

The Unavoidable Disaster

Every passing day seems to indicate that the US economy stands to suffer a recession in the near future. Many argue that the inevitable has already occurred, and that the US is not recovering.

Clif Droke recently wrote:

This e-mail expresses a concern that many citizens are feeling right now, namely that many segments of the economy are already in recession. I agree that there have been recessionary conditions in some economic sectors and this summer reminded many business associates of the summer of 2001 (the depths of the last recession).

According to the economic numbers, however, the economy hasn’t gone into recession yet. The reason for this, believe it or not, is partly attributable to the weak U.S. dollar. Yes, dollar weakness has saved the day as strange as it may seem. Export growth has been exceptionally strong thanks to the dollar. This has made U.S. products more competitive internationally.

As Mark Dodson of Hays Advisory recently observed, ““Right now, the surge in exports as a result of the weak dollar is what is saving the US economy from tipping into recession.” Dr. Joseph Davis, an economist with the Vanguard Group, has observed that dollar weakness “will improve the trade imbalance and benefit the U.S. and global economies.”

Should the economy prove to be receding, home owners may find it prudent to play carefully for their financial wellbeing. Modifications to one’s budget, and even making bi weekly mortgage payments can greatly affect the financial situation of a homeowner.

October 22, 2007 | Filed Under Uncategorized | Leave a Comment 

Lonestar buys Accredited

Interesting developments as further consolidation takes place in the lending market.  Lonestart has made a bid to purchase Accredited.

Bloomberg has the latest:

Lone Star Funds agreed to buy out Accredited Home Lenders Holding Co. for $296 million, ending a two-month dispute with the mortgage lender over terms of an acquisition soured by the worst U.S. housing slump in 16 years.

Lone Star agreed to pay $11.75 a share for San Diego-based Accredited, said a statement released today by both companies. That’s less than its initial offer price of $15.10 a share on June 4 and higher than the $8.50-a-share offer made in August after Accredited sued Lone Star for trying to withdraw. Accredited said today it agreed to halt its lawsuit.

More than 110 companies have halted some mortgage operations or left the business entirely since the start of 2006. Foreclosures set a record in the second quarter and overdue payments on U.S. subprime mortgages rose to the highest level in five years, according to the Mortgage Bankers Association. That’s made investors who buy mortgages reluctant to bid, and bankers have cut off credit lines to home lenders.

It’s interesting that Lonestar managed to successfully renegotiate a purchase price after agreeing to a $15 per share purchase price some time ago.  Certainly worth the trouble as far as Lonestar was concerned.

Creatively approaching finances is one of the best ways to successfully operate in personal and business finance.  Bi Weekly Mortgage payments are one example of successful application of said principle.

September 28, 2007 | Filed Under Uncategorized | Leave a Comment