Let me start by saying most if the new mortgages being originated are of very high quality, big down payment and the ability to repay as long as they have a job.
There is a class of High LTV (loan to value) mortgages being given for refinances that are just outrageous. LTV of 158 meaning for a house worth $100,000 they are lending $158,000 however there are some loans that make your eyes pop out!!
Range($) #Lns $ Balance % Bal
126 - 139 200 46,329,952 33.64%
140 - 153 140 32,223,009 23.40%
154 - 167 93 21,677,073 15.74%
168 - 181 58 12,800,494 9.30%
182 - 195 34 6,778,600 4.92%
196 - 209 29 6,486,841 4.71%
210 - 223 21 3,687,626 2.68%
224 - 237 12 2,156,600 1.57%
238 - 251 10 2,361,350 1.71%
252 - 265 7 1,639,550 1.19%
266 - 279 2 487,950 0.35%
280 - 293 3 363,700 0.26%
294 - 307 2 424,492 0.31%
322 - 335 1 177,000 0.13%
392 - 405 1 118,750 0.09%
Total 613 137,712,987 100.00%
This is a pool of $137 million of average loan at 4.19% mortgages that were refinanced last month, the last loan of $118,000 has a LTV of around 400% meaning the house is worth less than $30,000. I hope for the US taxpayer they don't walk since this is a Fannie Mae loan.
I know there is some logic to refinancing higher rates to try and keep people in their houses, but to see 70 out of 613 mortgages where the house is worth 50% or less of the outstanding balance we better hope they keep paying because if they walk away the recovery will be about $0 after expenses.

How LTV of 400% approved ? DO you have to give a cut to the loan officer ?

Which is the lender ? I'd like to get a 200% cash out refinance for my house ?

Nothing has changed since the collapse or it will.

Bear...

Can you clarify something...

Isn't the last loan in the $392k to $405k?

Thanks.

Delphis, the 392 to 405 is the LTV, there is one loan of $118,750. All the numbers to the left represent a range of LTV for this collateral for example line 1 is 126 - 139 200 46,329,952 33.64% a LTV of 126 to 139, 200 loans, $46,329,952 balance representing 33.64% of this $137 million dollar pool of loans.

Roger that...thanks!

Are you sure? Otherwise you are saying that every single loan in this pool is >126% LTV.

Also, then why does it say Range ($) -- note the dollar sign.

That reads to me like the first column is the range of the appraisal value, which would make a lot more sense. There are still ranges where the LTV is >100%, on average, but not as bad as you make it out to be.

Thought the same thing Squeak...

Not necessarily specifs, but do you mind sharing what the source - or some info as to what/where your list comes from?

Yeah, it's not the 1 loan, it's the 200 loans:

126 - 139 200 46,329,952

200 loans at 130K = 26M. But the balance is 46M for those loans. That's well over 160% LTV for those 200 loans.

Let me make it a little more clear, this is a pool of all HIGH LTV loans, the lowest LTV is 126 so a house worth $100,000 has a $126,000 loan outstanding. Line one the range is 126 to 139 LTV, 200 loans worth 46,329,952 or $231,649.76 is the average loan size.
Swing, my source is Bloomberg I tried grabbing a screen shot but was unable to for some reason.
Now here's the part that will probably make you all even more crazy, this pool of MBS with a 3.5% pass-thru rate coupon to the investor (4.19% is the gross rate, big servicing fee on this of .69 BPS) trades at a big premium vs standard conforming collateral, over a 2 point premium. Investors are willing to pay up because these people will not be able to refinance in all probability for many years.

Thanks for the additional info, bear. And for the thread!

Quote:

the part that will probably make you all even more crazy, this pool of MBS with a 3.5% pass-thru rate coupon to the investor (4.19% is the gross rate, big servicing fee on this of .69 BPS) trades at a big premium vs standard conforming collateral, over a 2 point premium. Investors are willing to pay up because these people will not be able to refinance in all probability for many years.

Bwahahah

Will be interesting to see how that works out for them

Sheesh, they would be better off "investing" in peer to peer internet loans.

Personally, I prefer microcredit loans to rural farmers in India.

"There's an ETF for that."

So nearly 70% of this dog pile is backed by mtgs which are [approx] LTV of 140%+ and it is trading at a premium bc of no pre-payment risk

These are Harp 2.0 loans. The risk is already on the books. So this really isn't as bad as it looks.

Given that these are HARP for purposes of calculating LTV, were the properties mark to market at at HARPation time or are they based on the lofty valuations the properties had when they were first mortgaged?

New values. Loan had to originally qualify. Most were probably either 80% ltv or 95-100%ltv at origination. What you generally see is people scraping together 20% down to avoid MI or putting down the minimum.

My point from before that I was trying to make is that although these securitizations are full of ****ty mortgages - they were already on Fannie/Freddie books. What they've effectively done is reduce their risk by lowering the borrowers rates at the expense of the original bondholders who no longer receive the return.

But truth be told looking at page one of a Fannie MBS offering I think the bondholders should consider themselves lucky to get their money back. Currently it's the taxpayer taking it in the shorts.

Right TMD, like I pointed out at the start of this thread:I hope for the US taxpayer they don't walk since this is a Fannie Mae loan.
I know there is some logic to refinancing higher rates to try and keep people in their houses, but to see 70 out of 613 mortgages where the house is worth 50% or less of the outstanding balance we better hope they keep paying because if they walk away the recovery will be about $0 after expenses.
These loans are an exclamation point on the problems in the housing market, if anything goes wrong the borrowers have no incentive to keep paying and recoveries for the taxpayer will be next to nothing after expenses.

Exactly correct, Bear. Nothing gets fixed and the incentive to walk away will remain. It's just more transfer of wealth to the banks for fees and more burden on the young...

Thanks TMD

Ok, call me stupid, but I still don't understand.

Why is it when it says: "$ Balance", it talking about "Balance of the Loan(s), in US Dollars"

But, when it says: "Range($)" it is not talking about "Range of the Value(s), in US Dollars", but instead, as you suggest "Range of LTV's, in Percentages"?

Why the inconsistency?

Squeak, the first 2 numbers are the range for LTV for that group of loans, the next number is the number of loans in that range, then the balance added together and the % of the pool which is 613 loans $137,712,987 outstanding balance when issued 1 month ago.
So the worst loan in this pool has 1 loan in it with a LTV of approximately 400 and a balance of $118,750 or.09% of this pool.
Hope this helps....

Bear,

You are not reading my question (or not understanding it).

If it is the range for LTV (like you say), then why does the column header say Range ($) (note the Dollar sign, and not a percent sign). The column header says *nothing* about LTV.

What is telling you that the first column is LTV %, versus the more reasonable assumption (based upon the actual label) that it is Range of Dollar values?

Yeah sorry Squeak, I hear yah. I know it's not clear, but it is the LTV, on Bloomberg when your looking at pools they have a separate page for LTV of pools and that's what I dragged over.
In terms of dollars, take any column and divide the total of outstanding balance by the number of loans:

line 1 200 loans 46+mm average loans size 231,649.76
line 2 140 loans 32+mm ALS 230,164
If I can grab the whole Bloomberg page tomorrow I will, it's very clear, but the LTV info is accurate as described.