john haskell

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  • JPM, Citadel Tag Teaming Thornburg Mortgage?
    Yesterday's trivial $28 million margin call is today's $600 million margin call. They are working in a "fairly safe area of the mortgage market" like the Gaza Strip is fairly safe. Alt-A, or otherwise known as "pre-default"... mortages, never existed before the current debt bubble was inflated. Now they are returning to well deserved oblivion.

    Back to the future and 20% downpayments with income verification and self amortizing loans. Goodbye to TMA and their ilk who sold free puts to homedebtors.
    Mar 07 16:52 pm |Rating: 0 0 |Link to Comment |View article
  • Thornburg's a Huge Bargain After Monday's Crash
    Mr Yetiv- I was not referring specifically to FICO scores, but to historical default rates, which I believe will be a poor indicator of future default rates, due to the uniquely debtor-friendly provisions of Alt A mortgages.

    Also as to FICO scores (which I did not directly address earlier) you will no doubt be aware that Fair Isaac recently announced substantial changes to their scoring algorithm because of its perceived failure to predict risk of default.

    "We don't think FICO scores have caused or contributed to the subprime mortgage problem," says CEO Mark N. Greene, a 12-year IBM veteran who took the helm at Fair Isaac last February as its problems were becoming apparent. Lenders that followed traditional underwriting standards, he says, "steered clear of subprime issues."

    Of course, Thornburg Mortgage's entire reason for being was to help borrowers avoid "traditional underwriting standards" by lending them money that they could not demonstrate an ability to service.

    And this is all before we get into the question of how a company can miss a $270 million margin call and still be a buy, which I suppose has been exhaustively examined by other posters.
    Mar 05 10:04 am |Rating: 0 0 |Link to Comment |View article
  • Thornburg's a Huge Bargain After Monday's Crash
    Following historical default rates could possibly work. Of course, driving your car while looking only in the rear view mirror could also work. The stock market tends to sell off before the actual bad news is announced, not after.

    Alt-A mortgages are not "subprime," and you are correct to point out that journalists have identified the nation's mortgage problems as only stemming from "subprime." Alas I am afraid that is because distinctions between various kinds of risky mortgages elude our friends in the Fourth Estate.

    Alt-A loans should be considered "pre-default"... loans as they are a kind of financial vehicle that no one ever thought of before Greenspan cut rates so dramatically in 2003. They will also have incredibly high default rates as homedebtors realize that Alt A mortgages are free puts issued by the shareholders of companies like Thornburg Mortgage. And when you are in a house in CA, NV or FL that is way underwater, a free put back to Thornburg (inter alia) is a real lifesaver- for your retirement, your children's college fund, or anything else you would like to spend $200-$500k on other than your underwater mortage.
    Mar 04 15:29 pm |Rating: 0 0 |Link to Comment |View article

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