Friday, February 1, 2008

January Survey of Downey Financial (DSL) Defaults and Trustee's Sales

Today I updated my Downey Financial (DSL) survey of defaults and trustee's sales for January 2008. It's based on a sample of San Diego, San Joaquin, and Solano counties only. See the footnote for more on how this data is collected. (1).

I was waiting to see whether the jump in December was just an aberration related to the end of the year. Nope! Looks to me like a runaway train of defaulting borrowers.

This suggests that the Downey 8-K (which should come out in two weeks) will once again show massively higher non-performing assets.

(1) Not all counties make this data easily available online (especially in California). Los Angeles does not provide online access, and many of the counties that do have extremely cumbersome interfaces. My surveying method is to count all of the default notices and all of the notices of trustee's sale and trustee deeds during the time period. I do not make any adjustments for notices of rescission of default. I have found this data to be an excellent leading indicator, but no warranty is made as to its accuracy.

Disclosure: Own DSL Puts.


Anonymous said...

I don't see how Downey escapes swirling the bowl.

Anonymous said...

Thanks to this recent -- not to mention apparently absurd -- rally, DSL puts have gotten a bit cheaper; it's difficult to find shares to short.

Yre said...

Wonder if it is time to cover the short position ? or to add more short positions.. not sure.. Only scary thing is what if govt decide to bail out these guys.. !!!!

Ben Bittrolff said...

I've updated my post and charts: Fed CHANGES Really Scary Fed Charts

Removing TAF makes a significant difference.

$50 billion to be exact.

TAF operations are ongoing. So this discrepancy would just continue to grow.

LIBOR is also starting to misbehave, again. Nothing too serious yet (not like before Christmas) but you get my drift. Stress is creepying back into the system.

The (counter trend) rally in risky assets should just about be over, if I've interpreted this correctly.


Anonymous said...

I have DSL puts basede on more than one analysis. Someone referred to DSL as a "Zombie." AS financials roll over and further info re DSL is revealed it should go much lower.