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 Residential Real Estate Crash Index
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: MulhollandDrive who wrote (110865)3/17/2008 10:00:55 AM
From: HawkmoonRead Replies (1) of 306849
 
by now it should be crystal clear by now that the FEAR is of being the bagholder of the 'unprecedented' loans that were made in a declining RE market goes to a risk management decision that SHOULD be obvious

Sure.. loans were "unprecedented".. And politicians encouraged home-ownership by those who were no financially qualified.. And sure, that increased demand inflated RE valuations..

And that link you provided indicates we're 100% above the historical mean-average for RE prices. So a 50% write down (up front, or over the 30 year term of the loan) would RESTORE the equity to debt balance to manageable levels in the underlying property (which isn't going away)..

Someone has to own that property is my point. The question is finding the most efficient pricing mechanism for determining what the actual value of the collateral should be, and then that valuation can be applied to the mortgage bonds (and thus, the MBS's)..

Thus, the more I think about it, Bernanke's advice to write down 50% of the loan value on sub-prime mortgages, combined with Forbes' advice to recognize AAA (and maybe Alt-A) losses when actually realized, could be an efficient means of restoring liquidity to an already illiquid market.

Of course, if you're 100% bearish and have a desire to see (or sincere belief) all residential real-estate in the US be declared worthless, then obviously your perspective is understandable.

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

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News