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User Info	Koolaid iditots; entered at 2007-12-02 00:53:45
Bw8472 Posts: 6446 Registered: 2007-06-28	The dawning horror of this folks is simple. In a declining market the value of any loan over say 65% ltv is negative, below par, ie as a profit center it's a big fat red candle. Let's assume values fall back to the mean, let's say they fall at least 40% which is what it would take to do that in most hot markets, that means row after, row, after row of zeros as far as the eye can see. The truth is loans done right now, seemingly good loans with good ficos are not worth any premium at all, they are in fact a giant loss, each and every one of them. If the value falls another 20%, each and every loan is a loss, it's not that the loan is worth zero, it's that not only is it not a profitable exercise, it's that you would need to pay someone a lot to take it off your hands, a **ing **load. It means that if you really are dead serious about surviving, you have to demand a minimum of 20% down on every loan you portfolio, MI insurance is useless, your counterparty better have more money than WB a thousand times over or it's still not going to do you any good. Of course if house values go up, you're in for a great profit, that's the little if that couldn't right now. The whole universe of lending better pray for a miracle, cause that's the only thing that can save the entire system. 2007-12-02 00:53:45