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

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To: John Vosilla who wrote (69014)	8/29/2006 8:30:27 AM
From: Ramsey Su	Read Replies (2) of 110194

biz.yahoo.com Is this another blow up? From the PR: Mortgage banking operating earnings for the first two months of this quarter have been unfavorably impacted by lower gain on sale margins, further reductions in mortgage production and increased costs to hedge the servicing risks. I asked an analyst last week as to where I can find loan repurchases in a company's 10Q. He said it would most likely be factored into the "gain on sale" line item, along with 7 or 8 other things. This is because many originators would take the repurchases, package them and sell them to the likes of CBASS as "scratch and dents" to keep their books looking clean as much as possible. Right now, I have reasons to believe that foreclosures are already much higher than Wall Street is estimating. Furthermore, based on the small sample size that I have analyzed so far, the losses per loan is going to be SHOCKING. Bear in mind that real estate is typically a trailing indicator. If the lenders are taking the type of hits that I think they are taking now, wait till the prices start coming down.

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