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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: patron_anejo_por_favor who wrote (109145)3/11/2008 8:42:50 PM
From: HawkmoonRead Replies (1) of 306849
 
I think it will assist the housing bubble from collapsing in upon itself out of outright fear by investors of holding any mortgages..

The Fed has basically drawn a line in the sand with regard to AAA mortgages.. They don't care about Subprime, and only a bit of concern about Alt-A.. The banks are going to have to eat those loans. But they will help support the AAA bond market and let the banks amortize their losses over time.. At least that's my take on this..

And as was mentioned earlier.. they will only hold the debt exposure for 28 days, at which time the bank that borrowed the money will have to roll that loan over after having the worthiness of its collateral reassessed... If it fails to meet the Fed's criteria, the bank will have to pony up more collateral..

If anything, it should at least place some semblance of a bid under those mortgages until the private market comes in to take up some the load from the Fed.

Hawk
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