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

To: Paul Kern who wrote (87986)	9/3/2007 2:33:48 PM
From: Jim McMannis	Respond to of 306849

RE:"So, who do you negotiate a short sale with? "There will be a pension fund some where that owns 1/1000 of that POS mortgage and, you'll never be able out who or where it is" You don't bother. (you move on to another short sale if you're into that). The property eventually goes to foreclosure where the debt slate is wiped clean. The costs are huge. This is why the situation is much worse than people think. Can't address easily who really owns this stuff. Even if you can, those holding seconds on down the line have no incentive to write off since they won't get anything anyway. Could this actually be worse that Japanese Real Estate in the 90's? I wonder how their loans were structured and who ate them?

To: Paul Kern who wrote (87986)	9/8/2007 5:34:29 PM
From: RockyBalboa	Respond to of 306849

Same thoughts there: Message 23864121 (used with permission...) There's also another little problem. As the always astute Stephanie Pomboy of MacroMavens asks rhetorically, "How do you get a lender to renegotiate a mortgage when you don't know who the lender is?" With some $6 trillion of the $8 trillion in residential mortgage debt "having been securitized and now sitting...lord only knows where...how, pray tell," she muses, "does one structure a new deal? One can only imagine the long-distance bill the FHA will have to run up as it tries to arrange a conference call with the Taiwanese insurance companies, German banks, U.S. pension funds etc. etc." Ultimately, she fears, the policy makers, thwarted by securitization, will switch their focus to borrowers. "Why waste precious time trying to identify and then cajole lenders," she reasons, "to play nice with their customers, when you can just run off a fresh batch of dollar bills and dispense them to ailing low-end consumers so they pay their mortgage and credit card bills?" But, Stephanie sighs, the current credit bust is not confined to real-estate lending. In truth, there are interest rate "resets" galore across the entire economy. Borrowing short has become a raging epidemic. Floating-rate paper now accounts for 54% of total debt issuance, up from 26% as recently as 2002. That means a startling $540 billion in corporate bonds will need to be rolled over next year. The serial abusers in this realm are -- who else? -- financial enterprises, who need to replace a tidy $428 billion in debt next year, a third more than this year. In 2008, too, some $160 billion worth of leverage loans mature. To top off this orgy of borrowing short, there's the $87 trillion interest-rate swaps market. Essentially, she explains, here's where long-term fixed-rate obligations are converted into floating-rate short-term notes. Swaps, Stephanie reports, accounted for more than half the growth in the $145 trillion derivatives market in the past two years.