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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: loantech who wrote (27687)	3/3/2005 9:05:01 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

<The margins I look at may be .10-.25 higher on the libors than you list. Usually 2.25 and on the t bills 2.75.> Little confused, isn't it an even higher margin for subprime? 2.25-2.75 would be standard on one year wouldn't it? Is the two year teaser set to the one year on reset? Guess that would depend on the exact credit score wouldn't it? Secondly, do you remember what the teaser rates on these were in mid, 03 (notice big build up spike in purchase index (hit link) in spring- summer, 03, those will be reset)? How about 1H, 04? The big subprime wave occurred in 1h, 04, but there was also a smaller, but still significant wave in 2q-3q 2003 as well. Here are the two variables. idorfman.com nationalmortgagenews.com Think it pretty easy to see where I'm going with this? The coup de grace question then would be: what percentage of, or what kind of exposure is there to subprime borrowers with two year teasers who bought in 03-04 (at, or near at market top) in extended, high price Bubble locales? If rates stay here or go even higher, that's the catalyst to a housing bust and major financial fallout.