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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To: jjetstream who wrote (54)	7/2/2001 11:45:02 PM
From: patron_anejo_por_favor	Read Replies (2) of 306849

Good article, but I believe the disparity between C&I lending and home mortgage lending can be explained entirely on the basis of securitization and the role of GSE's. Simply speaking, the lender's creditworthiness is only given a cursory glance, since the loan will not stay in the lender's portfolio for more than a fleeting moment (relatively speaking). It's passed on down the securitization chain until it lands, safe and sound, in your money market fund's portfolio. Oh, FNM and FRE have "a few" loans resting on their books to maintain appearances. And they guarantee a whole $hitload more, with only the skimpiest collateral imaginable of their own, allegedly risk-tested (though never tested in a real-world slowdown of any consequence...at least not since their liabilities were even 1/8th the current size, back in the '90-'91 period). (see link, 1st graph): prudentbear.com A simplified view, but net-net, that pretty well covers it. Got government bail-out of massive proportion?

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