Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Think4Yourself who wrote (80433)	6/29/2007 12:14:15 AM
From: Jim McMannis	Read Replies (1) \| Respond to of 306849

sportsbybrooks.com

To: Think4Yourself who wrote (80433)	6/29/2007 11:11:53 AM
From: John Vosilla	Read Replies (1) \| Respond to of 306849

I'm confused how this whole foreclosure/REO game gets unwound given the complexity, layering and hedging of all these funds that hold groups of mortgages. Sorting it all out as these loans go down seems like a nightmare. It was difficult enough 15 years ago when you only had a few survivors besides the RTC to pick up the pieces.. Lots of delinquent mortgages actually got 'lost' in the process and no action was taken..

To: Think4Yourself who wrote (80433)	7/2/2007 12:40:22 AM
From: Robohogs	Respond to of 306849

The difference in coupons has to do with 3 main factors: 1. Pref equity is junior to subordinated or senior debt and had to be used because AHM clearly was trying to increase its regulatory capital (unsure who regulates them given their structure but definitely a consideration - pref equity is clearly a signal that they want capital treatment for this). 2. Embedded option is worth a lot less. Tech vols typically in the 70s while financials generally lower. Current sub-prime/mortgage guys do have higher vols than normal but still assume normalized vol a bit lower (and debt goes out for awhile). 3. High coupon on common raises the bar for the debt payout and reduces the optionality in the embedded option further. Jon