The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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From: ChanceIs	10/14/2009 9:34:03 AM
	of 306849

Denninger - Waterboard JP Morgan and The Mortgage Bankers Assn How to give an economics writer a coronary: Recommend something that has been done twice before, and both times led to disaster, including being a major contributor to The Great Depression. Well guess what: JP Morgan and the other banks are doing exactly that. Oct. 13 (Bloomberg) -- Banks will push the Obama administration to expand its mortgage-modification program to allow interest-only periods on reworked loans, seeking to bring more homeowners into the initiative while recognizing concern that it may only postpone defaults, according to JPMorgan Chase & Co. and... Again, we're back to the basic problem: If you recognize these losses the second lien holders all blow up. If you roll the second into the first mortgage then the property is so far underwater that not only is the mortgage unaffordable but there is no reason for anyone to take the deal. If you force first lienholders to take damage that the second should take then you destroy the securitization market for mortgages as you force losses on people that should be protected from them under black-letter law. In any event there are plenty of detonated (and actively hidden) first mortgages that have blown up too, and we've not even talked about commercial real estate exposure yet. Lots more..... market-ticker.denninger.net

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