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

To: jrhana who wrote (150282)	9/25/2008 2:29:50 PM
From: GraceZ	Read Replies (2) \| Respond to of 306849

Thanks for sharing that story. This is precisely what has to happen. I'm glad to hear about private companies engaged in doing this. I don't know if you saw the list I posted the other day, but it was a list of what various assets were being marked to market from the Morgan Stanley conference call. Here it is again: senior commercial are marked in the high 80s to low 90s; mezzanine marked in the low 70s, Alt A marked in the low 30s US residential in the 80s subprime CDO mezzanine in low teens Clearly, if her company can make money re-writing loans on these assets after buying the securities at 30 cents on the dollar, that sub-prime may be worth more than low teens. I would be curious what the percentage of "borrowers who want to continue to pay" is to those who prefer to walk away on subprime. What needs to be done, on a widespread basis, is those underwater mortgages need to be re-attached to the underlying security and losses written off. The quickest way to do that is refi at an acceptable loss in principle at a payment level people are able to pay. And to do it before that person, who is willing to continue to hold their house, gets so far gone that foreclosure is the only option. Speed is important, a house is a wasting asset. I don't know if the private sector can do this faster than the public or if there is enough capital interested in that kind of business. I'm guessing the private sector would do it eventually, but "eventually" isn't particularly politically attractive to those who have been lending the US their hard earned savings, like the Chinese.