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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: jcole05 who wrote (76313)4/18/2007 11:27:52 PM
From: XoFruitCakeRead Replies (1) of 306849
 
I don't have a bullish case for DSL, but I have a worthless case for all current DSL put.

Let's assume that the non-performing is slowly increasing until early next year before majority of the early loan hit 110% cap and reset to regular payment. And DSL is slowly adding reserve in the mean time to take care of the small default number. So in between now and early next year, DSL just moving along with the market. Majority of the problem loan don't get declare to be non-performing until March 08 (as an example, you can fill in the blank on the month), and we don't hear about it until May or June 08. Anyone holding put today is going to the cleaner and waiting for garbage truck to come around to pick up all the wasted put (since the longest put is only for Nov). I don't know if anyone outside of DSL know what percentage of their loan is going to hit 110% or 120% cap and hence the dilemma of owning put today (aside from the wide bid/ask and high premium).
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