EverydayInvestor (< 20)

EverydayInvestor's CAPS Blog

Mr. Mortgage on May Foreclosure Report

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June 14, 2008 – Comments (7) | RELATED TICKERS: DLS

The headline number is that NODs (notices of default) are increasing. Even worse, 75% of homes that get a NOD go back to the bank as REO. That means that the cure rate--those who avoid foreclosure--and the proportion of homes purchased at foreclosure auctions is at a low. Bank REOs now are the real estate market.

If you want to see what a distressed bank looks like, take a look at Downey Financial's (DSL) latest non-earnings release. The company's non-performing loans (NPAs) are now at 15% of assets, up from 7.8% at the end of December! Downey will be taken over under the gun of the FDIC within a year. I am considering short-selling it IRL and have shorted it on CAPS.

7 Comments – Post Your Own

#1) On June 14, 2008 at 10:22 AM, mandrake66 (98.29) wrote:

I've been trying to pare down my red-thumbs on financials solely to those I am betting on as bankruptcy plays. Downey is one of them. Others are NCC, Corus, IndyMac, Ambac, and UCBH. I've been dithering about a handful of others, but those are the core I'm hanging on to.

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#2) On June 14, 2008 at 11:04 AM, abitare (99.70) wrote:

Here he is on Alt A

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#3) On June 14, 2008 at 11:35 AM, falcon2382 (31.13) wrote:

Everyday, you mention that this is the data for June. How is that possible? We are only 14 days into the month. Are you saying this data is for the past two weeks? And if so, how could it possibly be calculated already. Just trying to figure this out--though I do expect June to be pretty shitty considering how bad the "spring" numbers were.

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#4) On June 14, 2008 at 11:53 AM, dwot (99.87) wrote:

falcon, just where are you reading that the data is for June. I checked it out and it is a couple months old already.

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#5) On June 14, 2008 at 12:57 PM, EverydayInvestor (< 20) wrote:

Mr. Mortgage says data is for june I think.

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#6) On June 14, 2008 at 8:20 PM, anchak (99.85) wrote:

Everyday....Look at my pitch on Downey ( i hope it stays up ...I am booking the points on Monday). They are a definite candidate. Others I think are CORS,IMB,NCC ( Its interesting that mandrake considers UCBH...I red thumbed them too based on 10Q- I will look a little deeper). FED looked interesting too.

With RF,FITB and KEY all recapitalizing or looking....the focus now shifts to the Bankruptcy candidates ( There are some sleepers - pun intended - out there) - they'll see their reserve requirements go up with Charges and need to shore up their Capital ratios.

I am waiting for this bounce FB has bet on to clear and pick the others.

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#7) On June 15, 2008 at 10:38 AM, mandrake66 (98.29) wrote:

I believe this is the article that led me to pick UCBH as one of my candidates. Regrettably at the time I didn't include Sterling Financial...I only put it in my watchlist and it's nosedived since then.

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