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

To: John Vosilla who wrote (63560)	10/9/2006 11:19:41 AM
From: CalculatedRisk	Respond to of 306849

WSJ on mortgages and bad loans ... online.wsj.com “A generation ago, nobody asked. Banks made loans and suffered the consequences when borrowers didn't pay. Today, a complex Wall Street machine buys and sells mortgages and packages the loans into securities that are diced and sliced and sold again to investors world-wide. Although the $9.1 trillion mortgage market has been relatively calm as the housing market has slowed, players on Wall Street and beyond are starting to grapple over bad loans, especially in the market for borrowers with scuffed credit -- so-called subprime customers.” ... “Mortgage repurchases aren't always reported, so it is unclear how many loans are being sent back to their lenders, or their total value. A study by Credit Suisse Group found evidence of a jump in the subprime market. It examined 208 bond deals involving pools of subprime mortgages totaling $234 billion. The study found nearly half of these mortgage pools had some loans repurchased in the first quarter of 2006, up from less than a third that faced repurchases in 2005. The dollar value of repurchased mortgages has been small -- well under 1% of the total value of mortgages in the pools with at least one repurchase -- but it also climbed, the study found. It is unclear whether the recent round of mortgage hot potato represents a fine-tuning of the system that helped create the largest mortgage boom in history or the beginning of a more serious shakeout.”