For those who do not wish to peruse the whole presentation (your insane if you do not) there are two slide that bear a close watch. The whole sub-prime has been exhausted. It is the Alt-A mortgage storm that is the cause of then next wave down.
What is an Alt-A loan? Current slang terms for them are “liar loans”, “no doc”, “teaser”, “pick a pay” etc. In short, these loans, whose use exploded in 2005-2008 and the next bane of housing’s existence. The largest problem comes from the resets over the next 2-3 years. These are loans that allowed the payee to “pick a payment”. They could choose the full payment, interest only, or the “minimum”. The minimum choice then allowed the bank to add the rest of what would have been a full payment onto the existing loan which caused it to “negatively amortize” or grow larger rather than shrink over times.
After a preset period, usually 3-5 years, the loans “reset” with a new payment (no more pick a pay) based on current interest rates and a current loan amount. Do we think folks who paid less than the full payment before will now be able to afford a new, far higher amount on a home worth less than the loan? Me either.
So the question then is, when do they reset? How much more pain is in store?
The next question is, “how big is this market”?
Yeah, big…
Please check out the presentation especially if you are either think of buying or selling a home. It may save you a fortune on either side…
T2 Partners Presentation on the Mortgage Crisis-4!3!09 3
Disclosure (“none” means no position):none
8 replies on “Tilson’s Updated Housing Analysis”
Tilson is the single biggest bozo on Wall Street and only produced this "analysis" after seeing that Bill Ackman did a really detailed "big" report on MBIA.
no comment on tilson and "bozo"
that being said, he has done the most detailed housing analysis out there.
Ackman's focused on the CDO market & Tilson took is down to the micro level
i haven't seen anything better out there…if you have. let me know and i will post it
he is not a bozo. he is just always a day too late on his "ideas".
well for a 'bozo' he's doing pretty well for himself…
you have to respect a man that goes as far as he can with what he has in terms of resources and intellect.
anyone know if the 2.5tn figure is the dollar amount of Alt-A mortgages originated or the amount that are still current?
i would imagine the peak of the problems in Alt-A have been pulled forward by defaults. despite the lower interest rates i can't imagine many were able to refinance but that could also alter the time table.
thoughts?
i don't think they have been pulled forward. i would imagine both homeowners and banks would let them sit hoping prices rebound and take car of the problem for them…
Yes, it is like sticking their head in the sand…
forcing sales or default now only hurts both..
i believe the numbers in the presentation are as current as available as of 4/2009
Sure, I can give you a more detailed analysis — the analysis that Tilson copied, from Amherst Securities!! None of his stuff is original at all. In fact, much of his first presentation was also taken directly from Pershing Square. While he might make all his stuff public (which shows how valuable it is to him), he is a complete follower and doesn't come up with original ideas. Buyer beware.
anon,
i will not defend Tilson's investing. BUT, he did not "copy" from amherst. they simply supply data and T2 compiled it for the presentation (and also from other sources).
that is like saying I use BLS for data for an employment post and you claiming "i copied from them"
data is data, it is how it is presented that is unique…
again, if there is another presentation out there, provided it and I will post it. i want to get as much out on the subject as possible