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To: Paul Kern who wrote (80008)7/9/2009 12:54:57 PM
From: Paul KernRespond to of 118717
 
Also, if the banks used 20-1 leverage for this paper and it declined 5% in value, their investment is worth zero.



To: Paul Kern who wrote (80008)7/9/2009 1:36:15 PM
From: tom popeRead Replies (2) | Respond to of 118717
 
But, they booked the paper with 30 years with of interest.

Straight mortgages are carried at original loan value, with interest income recognized as it accrues, are they not?

Agree with you on the pernicious effect of leverage on a portfolio of mortgages.


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