Friday, April 6, 2007

American Home (AHM)

Monday is going to be a rough day for longs in American Home Mortgage Investment (AHM). This company has made a large cut in its earnings forecast saying, "conditions in the secondary-mortgage and mortgage-securities markets changed sharply" during March. "Subprime" was only the beginning, folks. AHM is being hurt by Alt-A. Alt-A includes Jumbo loans - yes, even the upper end of the food chain is getting whacked by resets. Dont forget, on April 1st, tens of thousands of mortgages reset which threatens to send a whole new crop of people into 30 day arrears at the end of this month and down the abyss to eventual foreclosure. Warnings like AHM's and from M&T earlier in the week are only the initial trickle.

It will be interesting to see if the AHM news is kicked off to the side come Monday, or if it has an over shadowing impact on today's better than expected non farm payrolls data.

California remains ground zero for real estate collapse. What'g going on out there is downright scary. It's a contagion that will eventually make its way across the Rockies and then across the country over time.

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