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 : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (8144)	8/21/2007 6:39:46 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 33421

John, Isn't the bottom line that these CDOs represent the securitized mortgages on millions of homes, and in most cases the people who took them out did so with the ability to pay them at the original interest rates, correct? It's only if the interest rates are adjusted up significantly that most of these loans become suspect, right? (this obviously doesn't count interest only, and no-downpayment loans because they were counting on the actual value of the home increasing so they could "flip" it). And these CDOs were originated with the intent of the primary lender diversifying their risk to the general securities (bond) market right by reselling them to public investors, right? So if the CDOs fall in value due to their being dumped by the current holders, can they not be repurchased by regional and primary banks for a discount, and then the loan re-negotiated with the actual borrower at rates that more closely approximate the original loan, even if the borrower is on the hook for the full value of the original loan? Trying to get a grip on this CDO thing.. Just because the market for CDOs has dryed up doesn't mean those mortgage payments can't be managed if the interest rates on those loans remain low enough does it? Hawk