Got to love you AHM lovers. You're going to drink the Kool Aid all the way down. Great dividend huh? You're so, so stupid to think that give the stake of the overall market that the company will be able to sustanin the dividend level. I look forward to some of the "old reliables" getting on here and trashing me again today about how stupid I am; I'm a disgruntled ex-employee, etc. Facts are our friends and you guys have delued yourselves for months now based on one thing - a frigging dividend that is too good to be true.
Hey Two Year, rather than waste your time with the one a day bulls, why don't we continue my education on the AHM portfolio?
Let's start with what is their average equity cushion and then go to how that is appraisal fraud instead of real equity, or even how the declining housing market (a very real event) is making those loans more risky. But in the end, I need to get inside the circumstances of the actual defaulters and how many there are likely to be. The way I saw the situation defaults really aren't a big issue because of the general economic strength but the Mortgage guys have a yield curve problem. That premise is under attack in the some of the most recent data and certainly your posts -- I think.
lax underwriting here in conjunction with the option arms. been in this racket for more years than I care to admit, and never saw a lender underwrite loans this way - mininmum payment may be 1%, note rate more like 7%, and they're still qualifying at 4.25%. if they were regulated they couldn't do that. if they are do income checks at all. guess they gotta replace the servicing that's probably running off.
Yep, under that scenario that's the way it would often play out. Do I have to actually go read the financials to find out if that's what they've been doing? Without an equity cushion , it would be nothing but speculation in a continuously rising housing market. But then again, since housing peaked in 2005 why would the stuff hit the fan now?
let me better explain for you. The option arm loan which this company is king of works like this. You take out a loan with a very low start rate. around say 1.5 percent. Its a var. rate and the rates begin to go up. You should be paying a payment based on 6 percent but instead you make a payment on 2 percent. Then 2 years later you go to sell your home. 2 problems occur. first, you owe all the interest you failed to pay along the way that was the negamm part of the deal. its added to the loan payoff. Second problem, you bought at the top of the market and did it with only 10 percent down and now you owe more than you paid, to make matters worse your market is off by 10 percent or more. Whats the answer, you put the keys in the mailbox and move out in the middle of the night in your little bmw and your suv and avoid having to face the neighbors who thought you were loaded because you could afford a 7000 per month house payment(not). Then ahm takes it up the but. this is happening everyday in every state.
How stupid are YOU!! Their EPS far exceeds even the increased Div--go away shorty--this is short term , you better cover while you can. Assholes like you have said this company was going south for three years. This is just another great chance to pick up shares cheap. Subprime market is not going to effect these guys abit. Just keep sending me the checks while you shoot your mouth off.
See? It removes the credibility of a basher like you if you can't even respond to the questions I asked you.
I feel a lot better being long, now. And the market seems to be firming up. I think this storm is over.
The storm is over? What's that, post #11,614 saying the same thing on these Mtg. boards(NEW,IMH,LEND,AHM,FMT,ETC,ETC,ETC)?
I own a Mortgage Banking company. The "storm" is far from over. Unless of course, you can tell us how to fund loans without warehouse capacity?
Perhaps you know how to get the Street to stop putting back loans?
Since you seem to know, perhaps you can tell me how to sell these loans at 102? Shall I keep going????
I'm waiting, you seem like a sharp guy......
Not a lot of ahmblows bashing going on right now is there? I know it's ugly and I'm truly sorry you longs have been hammered to the extent you have. Unfortunately, several people here have been trying to tell you for several weeks as to what was probably going to happen. There is blood in the streets and all mortgage stocks are going down with the bad guys. All in all, and this pains me to say this, AHM is one of the better companies and will probably survive. My biggest fear for AHM is the CEO's ego. Strauss is the kind of guy who loves to push the envelope. I just pray that they haven't been holding back just a little on the disclosure side. I started posting here about the magnititude of buy-backs being put to AHM that I heard from people who are very in the know on the Street. Having a loan loss reserve of $17 million for $58 billion of production is more than ludicrous. You guys better have your fingers crossed.
1. Can they pay the dividend?
2. I have heard that Central Pacific Mortgage is geographically near AHM, and has a similar business profile. CPM recently and suddenly went bankrupt, leaving a lot of agents with unpaid commissions.
Is that information likely to affect the image of AHM and do the company good, or harm?
3. Also, I understand that less than 10% of the mortgages carried by AHM are alt-A; so it is unlikely to be affected by the growing default rate. Since you worked at AHM - can you say if this is true? Do they have any subprime?
First off, I don't and never have worked for American Home.
1. Obviously they can pay the dividend. Not only that, they have to pay. Real question is how long is it sustainable? Probably not too long.
2. CPM was run by one of the former "big guys" in the industry, John Courson. He, like a lot of people in the sector right now (including AHM), were too close to the forest to see the trees!!! Part of CPM was Ivanhoe Mortgage, a retail shop out of Orlando. Yes, they shut down in one day and left a lot of people being owed salary and commissions. Ivanhoe was much, much smaller than AHM and really not "geographically near AHM." Right now, anyone who has a job in the industry is extremely lucky. I don't you'll see any dislocation from AHM, nor any other lender lucky enough to be in business.
3. I don't know where you guys get all your info about the AltA percentages. A substantial amount of AHM's 06 production was AltA. One problem with this type of business is how people try to characterize it. I'm not going to spend the time to re-review the 10K, but I believe AHM disclosed a much higher percentage of AltA in 06. Most people will try to play games with how they rate the AltA loan production and some will try to call it Prime or Agency Conforming. That, in fact, might be true of some of the product AHM originated. The problem none of you want to face is that those of us in the industry, that compete with AHM, have seen some REALLY CRAZY product originated in 06 that we KNOW will perform very, very poorly. The real underlying issue with AHM is that anyone with a little knowledge of this business knows that out of $58 billion in originations in 06, at least $400-$800 million out of that business will probably fall into a category that will make it fall into the repurchase category. Since loan repurchase product is now trading at around 50%-60% AT BEST, AHM is looking at substantially more losses in 07 than the $17 million that is currently reserved.
Your statement that AltA loans at AHM are unlikely to be affected by the growing default rate totally overlooks what is actually happening in the market today.
Believe in your thoughts at your own risk.