The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Broken_Clock who wrote (79231)	6/9/2007 7:32:42 PM
From: TobagoJack	Read Replies (1) of 306849

an e-mailed response to my original question is as follows Yep. A lot of these tranches are worthless regardless of senior of jr liens. The riskiest tranches, including equities, are all in the first loss position. They typically are the last 5-10% layer, which in the event of a default and subsequent foreclosure, is almost certainly a total loss. These tranches, with "no risk" during the bubble era, allowed the MBS markets to flourish for the wrong reasons and artificially created value for the better tranches. Now that these risky tranches are more properly priced, all tranches are also affected. That is why rates are going to have a tough time going down. The foreclosures in Calif are hitting epidemic levels. I need to look into why it is not destroying economies in counties such as San Diego where real estate plays such a major part. will be home in 2 weeks or so, will pick it up from there.

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