Value Investing Message Board

STOCKTALK

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 : Value Investing

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Paul Senior who wrote (27550)	8/1/2007 6:28:14 PM
From: E_K_S	Read Replies (2) of 78673

Hi Paul - That's a good theme on FRE and if it develops as you describe, they should grow their market share. It's possible that if they eventually decide to offer a slightly riskier loan product (ie the new Prime Minus), they would be the best institution to dictate the guidelines and manage the risk. The Federal Government might even help in providing a segment of these loans with guarantees if an industry restructuring is necessary. It would all benefit FRE and it's future growth. The current sub-prime market developed w/o strick underwriting guidelines. Many of the companies that are getting hurt now provided their own products that never were tested through a complete real estate cycle. These non-standard sub-prime loans were packaged and sold in the third market w/o much transparency to the buyer. Now they come home to roost. The Fannie Mae and Freddie Mac underwriting guidelines are the gold standard in the industry. They underwrite billions of dollars worth of loans that follow very strick underwriting guidelines. The buyer of these loans knows exactly what there getting and the historical risk profile associated with the loan type. I wonder where most of the future hurt will come from (the customer, other banks, brokerage industry) if more of the business is consolidated by FRE? On another footnote, I guess I am beginning to like NYB more as this sub-prime scare is working itself out. NYB's loan niche is multi family construction financing that generates high fees at high rates with loans that turn over frequently. If the bulk of the future sub-prime loans either go away or are consolidated into an organization like FRE, NYB's product portfolio now becomes more profitable (at least until new competition arrives). It's certainly something that will take years to change. Many of these sub-prime banks will have to downsize their business, leave the market or be bought out at a steep discount. The smart investors will look to the new opportunities that occur when fear hits the street. I think you may be on to something with FRE. EKS

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next