BankUnited Financial Corp (BKUNA)

klemenv (< 20) Submitted: 5/09/08 5:46 PM : Start Price: $3.94 BKUNA Score: 75.70

Acording to BKUNA 10-K report:

"As of December 31, 2007, payment option loans with a balance of $6.9 billion, representing 91% of the payment option portfolio, were negatively amortizing with approximately $317 million, or 4.2%, of their principal balances resulting from negative amortization. As of September 30, 2007, payment option loans with a balance of $6.7 billion, representing 89% of the payment option portfolio, were negatively amortizing with approximately $270 million, or 3.6%, of their principal balances resulting from negative amortization. These loans are subject to interest rate caps."

If you follow Fitch reports, you know, that negative amortization is primary driver for foreclosures. Optional ARM are performing far worst than fix rate mortgages. Both S&P and Fitch are predicting deterioratin of optional ARM Alt-A loans.

BKUNA is loaded with optional mortages.

In total they have 10,7 billion of mortages.

On top of that they have 435 millions of HELOC.

BKUNA has 776 millions of equity. Aditional 2% deterioration of mortages would wipe out equity entirely.

With other words, BKUNA will have to raise capital (dilution) or will go bust.

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