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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Freedom Fighter who wrote (218210)2/1/2003 11:07:39 AM
From: Ken98  Read Replies (1) of 436258
 
Wayne, have you considered the $1 Trillion+ in loan guarantys and credit enhancements issued by the GSEs, primarily Fannie for apartment loans, in you analysis? They have little or no loss reserves for the credit enhancements and book the "fees" straight to income quarterly. With apartment vacancies rising in most markets, this is the real hidden danger that lurks just below the surface for the GSEs. Heck, if you just apply a normal, recessionary default ratio onto that guaranty portfolio it boggles the mind.

The other systemic problem I see with the GSEs is that if they were to even merely slow down their rate of growth, it would have a profound impact on housing prices on the ground. I seriously doubt that most banks would lend their "own" money on these 100% LTV, non-documentable income, no-underwriting, lame ass schemes, without which most of the homies would lose the majority of their customer base.
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