The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: John Vosilla who wrote (37763)	8/4/2005 2:23:50 PM
From: Ramsey Su	Read Replies (1) of 110194

LEND is probably the best run subprime lender out there. IMH is probably most honest with their conference calls. NEW and NFI are ...... Basically, after listening to the CCs, the industry is in bad shape. They originated loans but margins are so tight that they cannot sell them for much profit (gain on sale). In NEW's case, they are probably at a loss already since their origination cost is quite high. So much junk for sale on the market that it is unlikely margins would improve. We are starting to head into the 2nd and 3rd year of a lot of these loans when loss severity should be highest, compounded by a slower growth environment. Only "positive" being that they are all already massively shorted so shorts will support the stock as they take profit. There is no difference between the reits and the non reits, in my opinion. The reits may be better shorts because when they cannot deliver the dividends promised, then the value of a reit just vaporized. Also, as loan volume goes down, the fixed cost is going to become significant. It is a very ugly picture.

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