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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Paul Kern who wrote (37632)	8/11/2005 1:41:54 PM
From: Jim McMannis	Respond to of 306849

Didn't Fannie just give some dude $20mil to leave? That's as bad as that $223mil alaska bridge to serve 50 people on some island.

To: Paul Kern who wrote (37632)	8/11/2005 1:48:13 PM
From: John Vosilla	Read Replies (1) \| Respond to of 306849

Yes Fannie sounds like the Worldcon of this bubble. Jim Rogers sure thinks they are going down bigtime. Can't imagine between being stuck with many of the riskiest loans, with all the fraud going on, all the leverage, overvalued properties, no doc loan or nonamortizing loans and phoney appraisals then add in derivatives, interest rate and stock market risk it has to be only a matter of time before it goes down.

To: Paul Kern who wrote (37632)	8/11/2005 2:05:42 PM
From: mishedlo	Respond to of 306849

It's going to lose a ton on rising rates. FNM does not gain or lose on either rising or falling rates (provided there is a clear trend). FNM does however lose their ass whenever they are whipsawed. On every dip below 3.90 on the tnx (more or less and this is a guess but a pretty well known figure) FNM assumes that there will me more refis and has to adjust their hedges accordingly. Then back above 3.90 and they have to take them off, them back above about 4.40 or so they have to reverse and assume fewer refis. We have ping ponged back and forth in those ranges for years now and FNM loses on every reversal. That is what is hurting FNM derivatives. A slow steady movoe up in rates sure would NOT do it. A slow steady increase in rates would hurt business but would do wonders for the derivative mess they are in. Taking all of what I said into consideration, it is a fatally flawed business under some scenarios (like the one we are in for instance). ggg Mish