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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Metacomet who wrote (26065)	12/6/2007 12:50:22 AM
From: carranza2	Read Replies (3) \| Respond to of 218433

Wait a minute. It helps lenders because they don't have to take back homes in a bad housing market, mess up their lending capacity as a result. OK, I can buy that. What about all the assumptions made by the buyers and sellers of collateralized bundled debt that the rates would re-set to a higher one a year or two after the sale? They bought these toxic instruments on that kind of income assumption, which no longer holds. Instead of 6-7%, they go back to teaser rates for a long time. How does that help the holders of mortgage backed crap, mostly financial entities? It still gets written down. If they are banks, they still feel the pain. Still lose their lending capacity. Read the GS report on the subject. More losses. No bailout for them. Not as bad as foreclosing, true, but still bad. But more important to my point, by simply precluding foreclosures just so the lenders/holders can take less serious hits, but hits nonetheless, is not a terrific benefit to them. And it surely is no bailout as far as they are concerned. They don't get microwaved on 'max' just fried.