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

To: russwinter who wrote (46126)	11/25/2005 2:25:14 PM
From: Ramsey Su	Read Replies (3) \| Respond to of 110194

Russ, I am convinced that as time goes on, the tell tale signs would become more and more apparent. It is obviously to our benefit to read these signals as soon as possible. <gggg> FBR has a conference next week where a lot of the subprimers would be presenting. Regarding some of the loans that may appear to be outrageous, specifically the 1% loans, they may not be as bad as you think. Based on some of the material I have received in the mail, the 1% teasers are not available to the subprimers. In fact, I think pretty strong FICO is required. They are also not available to high LTVs. So the 1% teasers are probably more of a bait and switch tool. e.g. here are two loans. Which one do you think will go bad first? Loan 1. 90+% LTV. FICO 600. 2-28 terms with start rate at 5.5% fully amortized. Adjust to 6 over 6 months libor. 3% cap at reset, 1% per 6 month adj thereafter. Loan 2. 80-% LTV. FICO 700+. Teaser 1% for 6 months I/O. Adjust to 250 basis points over 6 months libor after initial fixed period of 6 months. 2% cap at reset, 1% per 6 months adj thereafter. I bet you I can work out Loan 2 much easier than Loan 1.