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User Info	Would the gov pay people's mortgage?; entered at 2007-12-01 15:28:54
Mtgspy Posts: 6202 Registered: 2007-10-27	" ok, so when the bonds they have RIGHT NOW go to a face value of 0 due to the defaults and they're worthless how anxious you think investors will be to lend money again for new bonds? " Jinxx, so that's what you are concerned? This is the expected value of a 6% teaser, resetting Libor + 3.5%, Floridian, FICO 680, LTV 80, Single Borrower: $98 / $100 notional. That's mildly subprime and I stress mildly. The breakdown: 100% par a) +2.5% interest rate premium b) -4.5% default cost net of mortgage insurance. Part a) and b) are sold separately. Furthermore part a) and b) later is each separated so that people with different ideas: - earlier vs. later default - higher vs. lower rate - buy & hold vs. technicals - hedge against ongoing business (like servicers who buys mortgages to hedge because they HAVE TO deliver what they signed on contract). can all take the RISK THEY WANT. This market is NOT ONE dude owning ONE America. So if reducing default works at the expense of 99% of the other who signed the contract relevant to them in good faith, is this still American? Doubt it. Breaking the contract requires everyone to agree, but holy **, look at my post on Fannie Mae and tell me that's remotely manageable. We are talking about people with money here so you know the argument is nil that it'll go ahead with any REAL implementation. Rick puts it best and indeed I am guilty for exaggerating the possibility but I was VERY**ed since yesterday: "This Dog WONT HUNT". Besides, the guy LONG CREDIT somehow end up with 0 and won't lend again? Then why is it that he bet the way he did? That people supplying no income documentation will pay back his loan? Last modified: 2007-12-01 15:32:08 by mtgspy* 2007-12-01 15:28:54