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

To: patron_anejo_por_favor who wrote (41209)	9/9/2005 1:58:08 PM
From: Ramsey Su	Respond to of 110194

I don't have the answer because of the changes in the mortgage structure. In the old days, loans are vertically sliced and sold off. By that, I mean you buy a pool of loans and you take it for what it is. If you want to buy the better stuff, you get less yield but less risk. If you want higher yield, go buy some Alt-A or the C/D papers. Today, loans are horizontally sliced into tranches. In addition, there are all these exotic synthetic instruments that I have no idea who is exposed to what. Having said that, logic would suggest that the usual suspects cannot escape some losses. What are the MIs going to do when FRE and FNM and telling their borrowers not to pay? As I pointed out in the last post, equity is eroding in the mean time. Are the GSEs being generous with the MIs' money? It probably took no effort for each of the affected lenders to do a quick estimate of their exposure. I assume they can do a zip code sort of all their outstanding loans. This is going to be a must next week. biz.yahoo.com biz.yahoo.com