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To: Perspective who wrote (17866)	9/13/2000 1:32:06 AM
From: pater tenebrarum	Respond to of 436258

funny enough, this is precisely what you'd expect to see as a real estate bubble nears its end. the lenders are now willing to forego prudent standards in order to share in the continuation of the bubble...quite amazing.

To: Perspective who wrote (17866)	9/13/2000 2:11:46 AM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 436258

Great, a hedge on your home. Unfortunately, it's like writing covered calls in that you reduce your upside in exchange for (in effect) a reduced capital expenditure. Like a covered call, however, not all basis are covered (you still lose your a$$ if the market truly tanks). Schiller's wrong, it doesn't work best in a declining market; it works best in a flat market. And that's a rather critical distinction with what we're about to see, IMO. In addition, the lender assumes a great deal of risk of default, since this sort of loan appeals most to marginal or high risk borrowers who can't scrape up the scratch any other way. In a proper real estate BK (or even a garden-variety recession), whoever is assuming the lender's risk will get killed. Hmmm, is National Commerce Bancorp of Memphis publically traded? My sell-side radar is starting to twitch! <G>