Homeowners own less of their homes than ever before. OK, strange statement -- but by it I mean that the equity in their houses is at an all-time low, and the "bank ownership" is at an all-time high. (For another take on these numbers, please see Eric Rothmann's recent blog.) This can be seen clearly in the graph below (from http://www.calculatedriskblog.com/). At the end of the first quarter, the equity portion in houses was just 41.4% of their total value. In other words, the mortgages outstanding on all houses in the country were 58.6% of their total value. When you buy a house with a mortgage, the amount of the mortgage declines slowly over time (unless it is an option ARM, in which case it can rise quickly during the early years). Housing equity is the amount of the downpayment plus any appreciation in the house ...

For Immediate Release

Chicago, IL - June 10, 2009 - Zacks.com releases the latest Industry Outlook. Today's interview is with senior analyst Eric Rothmann, who talks about the Financials Industry, including Huntington Bancshares Inc. (HBAN), MGIC Investment Corporation (MTG) and MBIA Inc. (MBI).

A synopsis of today's Industry Outlook is presented below. The full article can be read at http://at.zacks.com/?id=2678.

We suspect that the recent improvement in share prices for financial stocks has gotten a bit ahead of the earnings and growth prospects over the near term. Considering the high level of unemployment and with foreclosures gnawing at prime mortgages, we continue to think the pay-day lenders and pawnbrokers still represent an opportunity, currently.

While improvements have been noted, sightings of "green shoots" in the economy may have resulted in an overzealous response, as we continue to fail to

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This morning, the head of the Congressional Oversight Panel (COP) of the TARP program, Elizabeth Warren, called for a "stress-test do-over." The reason is that the original stress test might have been based on economic assumptions that were too optimistic.This was a point that I and our banking analysts Eric Rothmann and Neena Mishra made repeatedly before the original test results were made public (and Zacks was not alone in that assessment either). I certainly agree, particularly the baseline assumptions. The more adverse scenario is what has been playing out so far, or at least the actual numbers are more in line with it than with the baseline.There were three key sets of economic assumptions that went into each stress test scenario: real GDP, unemployment and housing prices. Relative to the scenarios, the economy has been doing best on the GDP front, with an actual ...

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We have once again eavesdropped on what our Zacks Equity Research senior analysts have been discussing with one another lately.  The most recent topic?  The proposed suspension of "mark-to-market" accounting (that is, the assigning of value based on an item's current market price):

Dirk van Dijk, CFA, Director of Zacks Equity Research: I'm not sure how many accounting principals are more fundamental than "lower of cost or market."  There are some transactions being done between willing buyers and sellers.  That is the best way of finding out what the "true" value of something is.  Suspending mark-to-market is just an attempt to hide the real condition of the banks -- it allows them to pretend that the garbage on their books is really gold. 

Isn't misrepresenting the values on your books the very core of the idea of securities fraud?  That is all that doing away with mark to market would be, legalizing and legitimatizing

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Beleagured nationwide commercial bank Washington Mutual, or WaMu (WM) is reportedly interested in being sold.  Probably more importantly, there do seem to be viable suitors out there who are interested in buying.  The New York Times talked about Wells Fargo (WFC) and Citicorp (C), in particular.

Stepping out of the way when it could have made trouble for a deal it made just before WaMu went on red alert, investment firm TPG has decided to honor the $7 billion influx to the bank.  An AP report this morning mentions that a failure of Washington Mutual could cost the FDIC north of $20 billion.  Where money like that will come from at this point, who really knows?

So there is motivation for other firms to step in and buy WaMu outright before it crashes and all that's left are little pieces.  WM shares are down 85% year-to-date.  The September quarter is expected

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In the Battle Royale that has become Wall Street and its largest financial institutions, while Lehman Brothers (LEH) stays on the canvas for the time being, Washington Mutual (WM) looks to be the next contestant in line to step up and take a pummeling.  WaMu shares hit a 17-year low Wednesday, and are down another 25% in the pre-markets.

Analysts have refrained from further downward estimate revisions in the past month ahead of September quarter, but we are keeping our eye on that for now.  WM's June quarter posted a dreadful -237% earnings surprise, and its current year-over-year growth estimate is nearly -500%.  If the company cannot make even the -91 per share the Zacks consensus expects, another major U.S. bank may wobble even more visibly.

Zacks senior financial institution analyst Eric Rothmann has kept a Sell rating on WM shares since November 2007, when they were trading around

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