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

To: Ramsey Su who wrote (57637)	4/7/2006 12:03:12 AM
From: John Vosilla	Respond to of 110194

"This time, the problem is with absolutely unsound underwriting guidelines supported by a fearless MBS secondary market" The potential credit and inflation risks are not taken into account by buyers of this long term paper that has a shelf life of 7+ years before being called in. If we are entering a rising rate environment it makes the situation that much worse. Bad loans result in huge cramdowns while good paying loans at very low fixed rates also have their values discounted. A no win situation..