Rising delinquencies and defaults will continue to push delinquency-to-credit-support ratios higher on the subprime tranches Scion is short.
Mostly true True in substance, wrong in a detail.
Prediction: Statements about events outside the person's control, checked once they fell due: did they come true?
The second judge would not resolve this claim; the verdict shown is the first judge's.
Said for an organisation they lead or work for; it counts on both records.
What would count as true or false
True: in the months after the 2006 statement (through 2007), delinquency and default rates on the subprime mortgage pools behind the tranches Scion was short (or, as a proxy, comparable 2005-2006 vintage subprime RMBS) kept rising, and delinquencies as a share of credit support (overcollateralisation and subordination) rose. Mostly true: delinquencies and defaults clearly rose and the ratios rose for most such tranches, with some exceptions or a short pause. Mixed: delinquencies rose but the ratios rose for only about half of the tranches, or rose only briefly. Mostly false: delinquencies rose only modestly and the ratios were broadly flat. False: delinquencies and defaults stabilised or fell, and the ratios fell.
Set before the research began.
Evidence (3)
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E1 Announcement: Moody's Downgrades Subprime First-Lien RMBS Moody's Investors Service · 10 July 2007
“the 90+ day delinquency rate for loans securitized in 2006 has increased from 7.9% in March 2007 to 10.8% in May 2007.”
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E2 Announcement: Moody's Downgrades Subprime First-Lien RMBS Moody's Investors Service · 10 July 2007
“remained relatively low, with the May cumulative loss rate reaching only 0.30%.”
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E3 Subprime mortgage lending and mitigating foreclosures Board of Governors of the Federal Reserve System (testimony of Chairman Ben S. Bernanke) · 20 September 2007
“delinquencies and foreclosure initiations in this class of mortgages are likely to rise further.”
Reasoning
Moody's reported that the 90+ day delinquency rate on 2006-securitized subprime first-lien loans rose from 7.9% in March 2007 to 10.8% in May 2007, and it announced downgrades of subprime RMBS (E2). Cumulative losses were still only 0.30% in May (E3), so credit support had not yet been much eroded. The sharp rise in delinquencies therefore points to rising delinquency-to-credit-support ratios. In September 2007 the Fed chairman expected subprime delinquencies and foreclosures to rise further (E4). No source reports the ratios for each tranche directly, so the verdict is mostly true rather than fully true.
Cite this claim
Michael Burry, “Rising delinquencies and defaults will continue to push delinquency-to-credit-support ratios higher on the subprime tranches Scion is short.” (said 2006). Verdict: mostly true. Reliability API, claim c_337b59f93c41, method 0.1.0+c876030c, dataset release v1.1.2. https://epistacklabs.com/claims/c_337b59f93c41
This claim is in dataset release v1.1.2, with the same verdict.
Reply to this claim
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Verdicts are made automatically; how verdicts are made.