SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Ramsey Su who wrote (70847)10/4/2006 2:13:57 AM
From: Clarksterh  Read Replies (1) of 110194
 
Ramsey - The difference between yours and Wall Street's view can have only two real possibilities:

a) That you believe that over the last two or three years there have been a very high percentage of loans given out without significant consideration of ability to pay... But in contrast Wall Street believes that the vast majority of mortgages over the last 2 or 3 years DID take into account ability to pay etc. . So WS believes that the new guidance is not a change.

b) WS believes the FED has no ability to actually enforce the change.

Or some combination of the above.

You might ask some of your contacts. I'll bet they mention both a and b in their explanation.

So, what is your metric to support the contention that recently the banks have been ignoring ability to pay etc? Some interesting metrics might be:

1) The booked rate of interest plus principle vs income amount. (But I'll bet no one reports a metric anywhere close to that)

2) For a given type of loan (e.g. IO ARM) the average income vs initial loan payment.

3) The average FICO scores of first mortgages in 2003 vs 2004 vs 2005, ... .

But other data such as increasing rate of ARMS is circumstantial at best. E.g. lots of folks who are more than able to pay a fixed rate loan choose ARMS. So an increase in the rate of ARMS is not necessarily a direct indicator of poorer lending practices. Thus WS may not actually believe that there is a problem?

Clark
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News