sid_finster said...Tony: I read somewhere that something like 77% of GMAC's total home mortgage profile is sub-prime.
Mozatta said...
Sinister: a majority of GMAC is sub-prime. Not sure the exact amount, but I would bet it's quite a lot. They simply don't have the products to compete with the major A-paper lenders.
sid_finster said...
Mozatta: does a continued sub-prime pose any threat to GMAC as a whole? Or are they sufficiently diversified to weather even a sub-prime meltdown?
I for one wonder. If housing prices drop and credit tightens, there will be some spillover into GMAC's auto loan portfolio.
Rob Dawg said...
I can't remmeber how long ago but Calculated Risk talked about GMAC. Nobody said it out loud but not only is their RE portfolio subprime but their auto loans are at least as bad. The concern is that GM may be forced to "buy back" some of this paper and may itself be in deeper trouble as a consequence. Scary.
Tony Soprano said...
I've got 3 liters of Absolute soaking w/some Key limes. hehe.. The ultimate gimlet!
That sounds about right on GMAC.
sid_finster said...
GM has serious cashflow problems and legacy liabilities. That is why they partially divested GMAC in the first place.
I am dying to know whether GM could eat GMAC's worthless paper even if they wanted to.
Mozatta/Tony/Rob: would you characterize GMAC as "bottom-feeders" in the mortgage lending industry?
----------
At the time GMAC contributed a huge chunk of all GMs bottom line. They sold 1) because they knew what was coming, 2) knawed off their leg to save their life, 3) both. I'll let you experts take it from here.
36 comments:
Double FIRST.
Damn it..
You could congratulate me on my first FIRST. In fact you could be first to do that.
@Mozatta from the other thread. I am with you - I have only had bad experiences dealing with GMAC.
first with something to say....
Bob Dawg, I agree. At first I thought selling GMAC was exactly GM knawing their leg off to survive. Now, it seems like a wise move. No wonder Kevorkian bailed out.
I still think a lot of this sub-prime paper had been buried in pension funds and 401ks. If GM eats their garbage, it will be GM's penison fund that ultimately gets fed.
Next year this time, the story will be about imploding retirement funds from the housing crisis.
At the time, I also thought that GM was selling their crown jewels to support their legacy liabilities.
Failing manufacturers (International Harvester for one) have made a practice of spinning off legacies and worthless assets in an effort to save the enterprise. Courts have generally let them get away with it, too.
But is the GM pension plan and the UAW too politically connected to pull a stunt like that?
Here are some of the archived posts from Calculated Risk about GMAC
http://calculatedrisk.blogspot.com/2007/03/gmacs-subprime-mortgages.html
http://calculatedrisk.blogspot.com/2007/03/more-subprime-option-one-and-gmac.html
Now I shall read and see if my thoughts are correct.
Yo Rob Dawg,
Question for you... how much have you accumulated in total on your tip jar so far?
Does it beat snowflakes $384 or whatever he got in the whore-a-thon?
-Big Cheese
Remember in high school when that one kid would try to talk to you in the hallway? What did you do? You started to walk faster to try and seperate yourself from him.
I think the same thing can be said for this.
"Tip Jar." Full disclosure with the impendin re-launch. Enough to start up and keep going. Probably a little to reward good deeds. A couple of truly super generous people who deserve recognition but I'll honor their wishes for privacy. I actually feel uncomfortable about large donations. Something I have to get over as it shows the moral fiber of the best in our society.
Can we dig up some scratch to make an offer to Casey he can't refuse? I SO want to hear Galina get grilled on a call. I'd possibly be willing to give $200...but like any business deal I do, I want her ON the phone, answering ANYTHING we want and no interference from Casey. If he tries to interrupt her, he's docked. If he stands up for her, he's docked.
I don't care if he is on the call, but I WANT to hear her get grilled and defend her reasoning. I think it's a step to understanding what the deal is with her.
Well my 3-hour day is complete. I hope you all have a enjoyable Easter and take time to thank your "creator"
Now, it's on to the liquor store across the street from my office to buy a handle.
Part 2 of 3 of All Things Good's interview with T aka "Nacho" is now posted on our site:
http://itsallgoodsweet.blogspot.com
Thanks for allowing us to post this pointer in the comments here!
Dolph, I very much doubt Casey would allow Galina to be interviewed--nor would she accept doing so.
I was at lunch but better late than never - MURST! The first 'MURST' also.
Bringing murses to the masses, one snowflake at a time.
FEAR ME!
As additional information, like our little snowflake, each and every murse is unique and special in its own way.
Bringing Murses to the masses, one snowflake at a time.
Hey Tony S., only eight weeks left and you're gone. No more on HBO and no more posting.
I have a feeling I'll have internet where I'm going....
I've been thinking for some time that the financial services industry is actively attempting to bury the full extent of the damage in sub-prime. I have the distinct feeling that a variety of mechanisms are being used--accounting changes, sales of portfolios, and of course the magic of securitization.
What's the full extent of the damage in sub-prime? No one knows. It's the Japanese banks ca. early 1990's. Loans are being kept on balance sheets despite the fact that no one really knows how much they're worth. Sure, banks are required to report serious delinquencies, but there are ways around that, and I'm sure the banks are looking for them, whether it's renegotiating the loans or repackaging them.
The very fact that very large sub-prime portfolios have been changing hands is disturbing. Who in their right mind would be buying sub-prime right now? The risk is enormous, and yet I read reports of investment banks soaking up billions in loans from sub-prime lenders gone bust. I have the distinct feeling that the changes in ownership of the loans aren't linked to the possibility for profit (is there any to be had in sub-prime these days?) as much as for accounting purposes (specifically, covering up loans to sub-prime lenders gone bad by replacing them with sub-prime portfolios of equally dubious value.)
Spotted on IAFF, and worth a look:
Real estate prices, adjusted for inflation, presented as a roller coaster
Sorry for the rant :) . On topic, I think it goes without saying that GMAC is in some sort of trouble. Wall Street is of the opinion that the bad news in sub-prime has been aired, this is it, making our way through a rough patch, but no more suprises.
Hardly. All we know so far is which companies have completely gone bust. What we'll find out when earnings season rolls around is the damage taken by those who have managed to survive thus far--at least, we'll see as much of the damage as they haven't succeeded in covering up.
Whew, little off topic (but sometimes what isn't around here). Just got done 4 hours of yardwork here in sunny Virginia Beach... 10 bags of yard waste and multiple animals dehomed... (Including 2 snakes that I think looked a little like snowflake) And I am ready for some downtime...
I just posted this to Snowflake:
I'm not usually a hater, but you, lazy bones, are an idiot. You are Costanza, Lord of the Idiots.
You can't win. You can't beat me. That's why I'm here and you're there. Because I'm a winner. I'll ALWAYS be a winner and you'll ALWAYS be a looser.
No more deals. No more sweet RE.
The Hammer is coming down.
Sayonara.
C'est La Vie.
Bon Voyage.
Au revoir.
Last call. Closing time.
Turn out the lights, the party's over.
The fat lady has sung.
Game over.
asw: sweet
A story for you all:
With a credit score of 789 I was buying a condo last year. I had in excess of 20% down.
My RE agent recommended a mortgage broker. Since I was relocating from one state to another for a new job, much of the work for the mortgage was done via e-mail and faxing.
I provided the Mortgage Broker with back tax returns, pay stubs, and a letter from my new employer stating my start date and new salary.
Two weeks before closing, guess who he tells me he's using for the mortgage? GMAC. And, at a higher rate than originally promised. (We was to have locked me in at 6.25%, I ended up with 6.5%.
I was pissed. I asked him why a subprime lender with my credit history and score, my 20% down, etc., etc., He says GMAC was not a sub-prime. I told him I felt differently, but he was insistent.
I was pissed about the rate change and lender he selected and voiced my opinion. However, we were two weeks from closing, I had put a huge amount in escrow that I would forefit if I didn't close on the date agreed - so my hands were tied.
To this day I will not provide anyone with a referral to the mortgage broker. The RE agent is no longer providing referrals to that a** either.
And no, his name was not Nigel.
To Anon:
GMAC was not a subprime lender last year. They had a prime division. However, it sounds like your broker gambled on rates, did not actually lock you, and rates moved the opposite direction on him. So when rates moved the wrong way, in order for him to keep his commission at the same level, he bumped your rate. If you tell me what date you were supposedly locked, I can find out what rate someone with your credit SHOULD have gotten based on doing business with a reputable broker.
Retirement and pension funds are absolutely going to feel the brunt of the subprime crash. My wife and I are only in our mid-20s, and I'm worried about what effect the subprime will have on her CalSTRS account.
FWIW, I believe that the best thing that every one can do to protect themselves is to cash out of any and all money market mutual funds. While money market demand deposit accounts are generally FDIC-insured, money market mutual funds almost never are. A lot of MBS has found its way into money market accounts as a near cash equivalent, and when MBS nose-dive its not going to pretty. Too many people think that their money market mutual funds are covered FDIC just like their demand deposit accounts are, and that's usually not the case.
As for GM/GMAC... it's ironic that the two were split up to protect GMAC's assets from GM's problems and now the shoe is on the other foot. Although GM is hardly a strong company itself, so if they get stuck with any of GMAC's bad debts it could very well destroy the company. Like many, for the past decade I've been waiting for one of the Big Three to collapse. While Chrysler and Ford are still struggling mightily, for the first time I'm thinking that there's a chance that it will be GM that not only goes into bankruptcy, but is disbanded and sold off.
-walt526
With this agent, no news is good news.
More likely: No news means no action.
How can he just sit by and abide the silence? I'd be on the phone finding out every little thing that agent is doing.
http://iamfacingbankruptcy.com/
steph,
His hard working short sell agent probably isn't doing squat for him b/c he knows its a lost cause. Don't worry this one to will be foreclosed on.
What annoys me is that of all his properties, the Modesto one was the one he might have been able to save if he'd only actually worked at it. He completed the renovations & it's not a half-bad looking place, judging from the photos.
walt,
Has anyone actually had money in a
bank that went Tango Uniform and actually needed the FDIC?
I knew someone who had money in a Northern Virgina S+L in the early 90's that went tango uniform. It took him several YEARS to get his $$$ from the FDIC, and it was a headache even though he ultimately got all his money.
The point is -- one will likely be better off wiping their ass with that little FDIC sticker if things get bad enough for a money market acct to go south.
my "diversified" portfolio includes gold, silver, whisky still, guns, ammo, and a some rural farmland Looking at buying a partnership in a winery too (comes with some more land and inventory).
Ready to live off the land, with alcohol and PMs to trade for what we can't make. Land is located away from prevailing winds from any major city or miliary facility, so fallout shouldn't be an issue.
Google "Alexander Lebed" to read more about why this may be an issue. Sadly, such an attack is more a matter of when than if at this point.
Bottom line: The next decade will probably be interesting, and unfortunately only the prepared are going to make it.
...S+L in the early 90's that went tango uniform. It took him several YEARS to get his $$$ from the FDIC, and it was a headache even though he ultimately got all his money.
several years to get his PRINCIPAL back. The FDIC does not protect interest. Thus the govt has a wicked incentive to NOT pay in a timely manner.
mortgage broker?
Don't banks lend mortgage money where you guys live?
I've gotten five mortgages/Refis and only used banks. Brokers are just another person to take a cut of the pie.
King,
Obviously I agree with your concerns over the FDI, but FDIC insurance is not the only thing that distinguishes a high-yield savings account from a money market mutual fund. The difference being is that a bank has to become insolvent for one to have to rely on the FDIC for relief. While the collapse of MBS will cause plenty of problems across the board, I'm fairly certain that it won't bring down the entire US banking system.
On the other hand, to lose your principal in a money market mutual fund all that needs to happen is the securities that the fund is invested is unexpectedly lose value. The financial institution managing the fund may very well still be solvent even if its funds are in distress. How many tech funds lost a good chunk of their value when the tech bubble burst, but then the financial institution that managed it (Morgan Stanley, Merrill Lynch, etc) posted record profits in 2002-04?
What concerns me is that I know a lot of people my age who are being overly conservative by investing their retirement savings in money market funds thinking that those funds are completely 100% safe. And they're not.
-walt526
To Fear the Murse @ 12:42 p.m.
I went into contract on April 3 with a 30 day close.
Again, my credit was 789 - no bad marks.
Am interested in what I should have gotten.
I financed $108,000 on a $140,000 condo. My payment (PIT) is $808 p/mo.
I figure I'll wait it out, if rates drop down to 5.75% or 5.5% then I'll refi to a lower rate.
Anon,
Sorry for the delay. I could not access my information from home over the weekend.
It depends on what date you were supposed to be locked in but 6.25 (possibly 6.125 depending on your brokers fees) was reasonable, and for sure the max you should have been charged with your score.
Rates moved up about 1/4 pt from April 3 to April 17 so if he gambled and didn't lock you when he said, you got hosed as he passed the increase to you so he could make his desired commission.
If you tell me when he said you were locked in and when he changed it, I can give you an even better idea.
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