Well, Aurora going down was perhaps the worst kept secret in the industry-followed closely by Bank of America's purchase of Countrywide.
What big time lender is next? I'd have to guess WAMU (Washington Mutual). Lender buyouts are starting to increase.....and nothing will surprise me anymore.
We also have to turn our attention now to the smaller community bank sector. They could have and probably used relaxed underwriting-especially for "small business" such as contractors!-and all of the smaller banks wanted to get into the profitable construction business! Also, if they went as far as doing 100% LTV 2nd mortgages, they are probably now doing what they can to keep some of those loans on the books.
I can see the fall out from the 2nd mortgages being tough on banks-and right now their problems are sort of flying under the radar because all of the media is focusing on the bigger lenders. Watch the area community banks-look for continued banking sector consolidations to include some of the smaller area banks.
Example; TCF-has shown to be a good bank, profitable in the past-it makes a lot of fee income on NSF fee's but, they are also deep into home equity loans-this bank is trading at year lows (10 year lows I believe) and should finally be bought out-but the buyer had better review their mortgage make up carefully. It MAY be a good time to add a little TCF to your stock portfolio as a short term play on a buyout.
The banking sector isn't safe yet-there's still a lot of ARM issues that haven't surfaced (Adj mortgages that people haven't refinanced but are currently making the payments, loans that haven't adjusted yet, etc.), the 2nd mortgage defaults will be the next big issue-and this just may take out some of the area community banks.
Because there is always a positive to every story...here it is! -it's a great time to look at buying a home-rental markets are up, housing prices are down, and mortgage rates are currently back down to 2004 levels!