If you live in a tony northeastern locale, as I do, you're surely aware that the high-end of the housing market is utterly falling apart. Inventory is piling up rapidly....and demand is absolutely *bid-less*. Homes in towns near me that would have sold for $1.6 million recently are now languishing at $1.2 million without any buyers in sight. And homes that would have sold for $1 million 18 months ago are now hitting the low 800s without moving.
To ask a stupid question:
Why are luxury homes in the process of falling off a cliff?
Well, look no further than this recent news item:
Bank of America Corp. was the largest jumbo lender in the first quarter, with almost $9 billion in new loans, followed by Citigroup, according to newsletter National Mortgage News. JPMorgan ranked sixth. San Francisco-based Wells Fargo & Co. was the top overall mortgage originator, followed by Bank of America, JPMorgan and Citigroup, the newsletter said.
So, just as jumbo borrowers were about to have their collateral walloped....
Ken Lewis decided to become the largest jumbo lender in the country!
Remember, this is the same guy who jumped head-first into subprime lending (er, legacy toxic debt) in July 2007 right when that market was starting to implode.
Barbara Desoer, head of Bank of America’s mortgage unit, said in a March interview the bank was seeking to make more jumbo mortgages, offering "extremely competitive" rates to consumers. The Charlotte, North Carolina-based bank "has balance-sheet capacity and we’ve allocated it to jumbos given our presence in some of the states and regions where that’s important," she said. "We’re very much open for business."
Bank of America doesn’t now make jumbo mortgages through brokers or so-called correspondent lenders, only its "retail" channel, though that’s "under regular evaluation," said spokesman Rick Simon.
Let me ask y'all another question:
Is Bank of America in any position to be strutting *extremely competitive* on anything?
This Ken Lewis is an out-of-control lunatic....one whose ability to *read the cards* is non-existent. I'm sorry, you can't run a bank, no less one of the largest in the world, if you CAN'T GAUGE COLLATERAL.
This is the guy who declared 2007's fourth quarter the worst his company would ever see.
This is the guy who bought the less than worthless, aforementioned Countrywide.
This is the guy whose firm wrote over $110 billion in unsecured HELOCs in 2006 alone.
This is the Moron who paid a premium(!) for the disaster Merrill Lynch.
All one has to do is see his bets du jour to know where the next shoe's going to drop.
High end homes in *important areas*....see ya later!
See also - Refi'ing A Bubble.
And, for the master link on Kenny, my third favorite Moron - click here.