Tightening Lending Standards To Slash Subprime Mortgages by 50%; Alt-A by 25%

Thanks for that link, blast.

I did not understand the machinations of and contortions of how they bundle all that up, and spin it off, in detail.
 
Quote from ByLoSellHi:

Thanks for that link, blast.

I did not understand the machinations of and contortions of how they bundle all that up, and spin it off, in detail.
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You're a smart guy BuyLo....I have an email in to Herb Greenberg as he seems to be very suspicious of the company as well...but maybe you can figure out the lingo and what it means. I'm trying to figure out if the company is stating that their exposure to these " Off-Balance Sheet Arrangements and Aggregate Contractual Obligations" are not well secured...that's what it sounds like to me but it's some confusing language they use.

From the 10-K:

Our Prime Mortgage Loans generally are securitized on a non-recourse basis, while Prime Home Equity and Nonprime Loans generally are securitized with limited recourse for credit losses. During 2006, we securitized $47.7 billion in Nonprime Mortgage and Prime Home Equity Loans with limited recourse for credit losses. Our exposure to credit losses related to our limited recourse securitization activities is limited to the carrying value of our subordinated interests and to the contractual limit of reimbursable losses under our corporate guarantees less the recorded liability for such guarantees. For a further discussion of our exposure to credit risk, see the section in this Report entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations—Credit Risk Management .
 
Quote from otcstockfund:

one thing i never see mentioned is that lenders rely too heavily on FICO scores and not documented income....i personally know 5 people that bought houses in the past 2 yrs that have 700+ fico but cannot afford their houses
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This is the typical Alt-A loan.
 
Quote from TheDudeofLife:

This is the typical Alt-A loan.
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Isn't it rather a suicidal loan?
Where i live the bank is held responsible if they give too much money to a client. In taht case the bank pays the bill if something goes wrong.
Loans are also limited to 1/3 of the proven fixed income.
 
Without zero down, interest only loans with teaser rates, san diego is toast.

The median home in my area is like 800K, and couples with combined incomes of 100K gobbled them up in the last few years.

At 5% down, thats 40 grand. Know how many people around here have that much for a down payment? LOL.

What little buyers are left are going to disappear over night as soon as all these restrictions are full swing.
 
Quote from traderdragon2:

Without zero down, interest only loans with teaser rates, san diego is toast.

The median home in my area is like 800K, and couples with combined incomes of 100K gobbled them up in the last few years.

At 5% down, thats 40 grand. Know how many people around here have that much for a down payment? LOL.

What little buyers are left are going to disappear over night as soon as all these restrictions are full swing.
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Yeah, a lot of the "speculative" markets are finally going to join the fallout from the cutting off of these ARM loans.
 
It is my understanding that the majority of loans of this nature get sold off and bundled into collateral pools backing asset backed securities.

Does anyone here have experience with asset backed securities?
 
Quote from Sponger:

It is my understanding that the majority of loans of this nature get sold off and bundled into collateral pools backing asset backed securities.

Does anyone here have experience with asset backed securities?
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It depends on the lending outfit...some sell them, some hold them, some do both.

It's all very sketchy and I think they're all screwed even though they like to act as though the packaged ones are difficult to adjust because they've been packaged and sold.

That's the sad truth...bureaucracy and greed are going to harm this industry in the end and I think the lending houses and banks that pushed these loans should pay the brunt of the pain for their part.
 
Read the book "Liar's Poker"...that explains how the industry started.....very few keep the loan....most packaged and sold "upstream" to investors such as insurance co, pension, college endowments etc etc...

There will be companies who buy the "troubled" loans from these investors and rework them....small companies with knowledge of the LOCAL real estate market...

I hope you loan money to someone who doesn't want/can't pay it back.....I am sure you will feel bad and give them some more money to ease their pain....


Think of all the people who were able to buy their first home...something they could not do anywhere else in the world...

Will some lose their home?.....sure and that is too bad....but society is much better off with the remaining ones who keep their homes...

There are "shake-outs" in any business.....


SteveD
 
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