Housing Threatened by Defaults in Sub-Prime Mortgage Market

Quote from fearless9:

What happens to the home owner when their subprime lender goes broke?
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Basically all subprime lenders sell their paper to another lender. I would say that possibly 10% is held by the original lender at most. A majority of the time either HSBC, Countrywide, or another huge company purchases the paper. If the lender goes into bankruptcy (which has been happening to quite a few recently), then the paper is picked up by another company. It is not like there is a call for the money by the lender if this happens. It also does not effect the term of the loan.

I saw someone mention on here that the borrower should be able to renegotiate the deal. This is not an option and shouldn't be. It would be a disadvantage to the company that is willing to purchase the paper in good faith. They could refinance if they like, but if their credit situation has not improved, the refinance is pointless. Not only that, regulations are getting much stricter in the subprime market because of all the bad paper floating around.
 
In recent weeks, warnings from banking giant HSBC Holdings and New Century have shaken subprime confidence further, sparking speculation that a major bank is aggressively making margin calls.
Accredited Home Lenders (LEND :
accredited home lendrs hldg com
has had to come up with more cash after getting margin calls from some of its warehouse lenders, Stuart Marvin, executive vice president at the subprime specialist told analysts during a conference call on Wednesday. See story on Accredited's recent results.
"We have eight different warehouse lenders; I would say the majority of them are acting very rationally," Marvin said. "There is one that is acting somewhat irrationally, although I won't mention them by name. We have migrated the fundings away from that warehouse lender to one of the other seven until they begin to act more rationally again."
Industry publication National Mortgage News said this week that Merrill Lynch has been making margins calls. A Merrill spokesman declined to comment.
In late January, J.P. Morgan Chief Executive Jamie Dimon noted rising defaults in some of its riskiest home loans and said the bank had largely exited the subprime business.
 
Knew I sold out of my NFI 20 puts to soon - was satisfied with my 300% return but could have had nearly 1000%. Didn't want to be greedy, etc...

Rats.
 
Just amazing how fast this subprime junk can fall. So credit-default swaps have widened already 1000 bps. Who can afford to take a loan at 15%+??

Bloomberg reports that Peter Schiff says the subprimes are going to zero.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3VtwSIcEGAo&refer=worldwide

Roubini is following this closely in his blog. Here's the latest piece, a nice summary.
http://www.rgemonitor.com/blog/roubini/179416

But who is holding all this junk?? There's (almost) a trillion dollars of it floating around somewhere. Enough to blow up quite a few banks and hedge funds.
 
1 trillion, if concentrated appropriately, could sink the system.

It makes the LTCM debacle look like a pimple on an elephant's ass.

I believe total hedge fund leverage is about 1.5 trillion.
 
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subprime
 
is it true insider selling in corporate america is in the high end, historically? I know insiders were selling in the housing sector long time ago...
 
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