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

To: MulhollandDrive who wrote (110865)	3/17/2008 9:39:21 AM
From: 10K a day	Respond to of 306849

> i realize it is difficult to mark to market the bad loans with no historical precedent << I don't think you can unwind this. BWDIK

To: MulhollandDrive who wrote (110865)	3/17/2008 9:41:19 AM
From: John Vosilla	Read Replies (1) \| Respond to of 306849

'..by now it should be crystal clear by now that the FEAR is of being the bagholder of the 'unprecedented' loans that were made in a declining RE market goes to a risk management decision that SHOULD be obvious' Leveraged at 30 to 1 in a declining real estate market makes the equity worthless. Question is how much of the mortgage paper was Morgan buying on the cheap when there was no bid for that either of late. I see JPM is up 3%..wow Does it seem like Wall Street is making it hard to get an obvious bottom these days..you know the big 400+ gap down with VIX parabolic?

To: MulhollandDrive who wrote (110865)	3/17/2008 10:00:55 AM
From: Hawkmoon	Read Replies (1) \| Respond to of 306849

by now it should be crystal clear by now that the FEAR is of being the bagholder of the 'unprecedented' loans that were made in a declining RE market goes to a risk management decision that SHOULD be obvious Sure.. loans were "unprecedented".. And politicians encouraged home-ownership by those who were no financially qualified.. And sure, that increased demand inflated RE valuations.. And that link you provided indicates we're 100% above the historical mean-average for RE prices. So a 50% write down (up front, or over the 30 year term of the loan) would RESTORE the equity to debt balance to manageable levels in the underlying property (which isn't going away).. Someone has to own that property is my point. The question is finding the most efficient pricing mechanism for determining what the actual value of the collateral should be, and then that valuation can be applied to the mortgage bonds (and thus, the MBS's).. Thus, the more I think about it, Bernanke's advice to write down 50% of the loan value on sub-prime mortgages, combined with Forbes' advice to recognize AAA (and maybe Alt-A) losses when actually realized, could be an efficient means of restoring liquidity to an already illiquid market. Of course, if you're 100% bearish and have a desire to see (or sincere belief) all residential real-estate in the US be declared worthless, then obviously your perspective is understandable. Hawk