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: inchingup who wrote (149727)9/23/2008 11:20:05 PM
From: XoFruitCakeRead Replies (4) of 306849
 
"Is this how most of you see it?"

no, my 2 cents is that he is going to hold on to the house, collect the rents (the pool of mortage consists of some that is still paying, so Treasury will continue to collect whatever he can...). He is going to hold on the house for 15 years until the house is worth 750K again, sell it and claim victory... The working theory is that the "hold to maturity" value is much higher than market price. That is the reason why Loan Star and the like are buying the mortgage at the price that they did. They will make execellent money at that price even with a big discount rate.. For Treasury, the cost of money is only 2% right now.. So their hurddle is much lower than any private equity firm and Treasury can afford to sit on the mortgage pool for a long time. The key is that even though they are stinky pool of mortgage, some in the pool are still paying 6-7-8% mortgage rate. With 2% cost of money, even if 50% of the pool defaulted, there is still positive cash flow from the mortgage pool.. So if Fed can buy it 50 cents on the dollars vs private equity guy buy the same pool for 25 cents on the dollars. Treasury (aka taxpayers) will come out o.k... the key is that Treasury don't pay 1M for the same house.. And that is where the equity stake in the company come in handy.. If Treasury make a mistake (intentionally or not), tax payer can recover the money through the equity side and may make a decent profit after.. Essentially Treasury is trying to be private equity wanna be. Buying mortgage and not able to negotiate the best terms. But their funding cost advantage is high so the possibility of making money is not bad...
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