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

To: MulhollandDrive who wrote (87157)	8/26/2007 11:26:15 PM
From: Live2Sail	Read Replies (1) \| Respond to of 306849

>>nope, you care about the collateral if you believe there is a probability of a decline of the underlying asset For the sake of simplicity, let's say that that a debtor will make their monthly payments as long as he has the ability. You care about the collateral if a debtor is going to default, unable to make his payments. At that point, the lender (me) will have to take over the property. Then I care about what it's worth. A whole development of houses could drop to 0 and noone would bat an eye as long as everyone made their payments. Well, the owners would bat an eye, but they're good people, so as long as they can, they make their payments. > hudson is getting 40% down on $1M plus loans.... > that 'cushion' of equity certainly mitigates the risk should the borrower default >they could sell at foreclosure high end properties at 70 cents on the dollar and still come out ahead I agree, although I don't think Hudson is eager to get into the foreclosure/homeownership biz. > investors paying top dollar for properties priced to perfection with no equity is what brought us to this juncture in the first place....companies like hudson city are now and have avoided that risk by demanding higher equity participation by the borrower No, people unable to keep up with their mortgage payments due to ARM resets are what have brought us to this situation. The investors bailing were the second step. > iow, if you can find a borrower with 40% equity and can demand 10% good for you(good luck)....hudson city considers that kind of loan profitable and viable at 6.83 Can you elaborate on what "good luck" refers to.