to bring the discussion on real estate full circle, imho,
holders of MBS and many mortgage derivatives have a PUT back to the
originators of the securities in the event of 'bad faith'
transactions or technical paperwork errors . this bypasses any
monies set aside in a reserve for bad loans. thus many of the large
banks/brokers will be on the hook for these puts. fnma and freddie
already have at least $3 billion in puts back to originators (and
I'm sure more in waiting with what is going on now). thus reviewing
charts on FAZ and SRS would be appropriate. reserves for these puts
as they are non existent (BOA hasn't reserved for this for its
Merrill originations or any other company acquired past 2 years),
while reserves for delinquent mortgages are inadequate for
mortgages which can't be foreclosed on. the FED is keeping
rates low and POMO has to be active to give banks the opportunity
to make money (increase their tier 1 capital) to offset the
above. while the overall trend of the mkt is up (at the moment),
there are shorting opps in sectors. low rates for an extended
period is vital to the FED to get people to refinance their
mortages which in turn will remove some of the 'faulty' mortgages
outstanding before they go delinquent.
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
Hey guys, did not realize this is a real estate site.
Posted by kobie on 15th of Oct 2010 at 11:37 am
Look SPX past 61.8% retracement. Hope you guys caught it through all the chats?
Yeehaaaaa!
I was assuming most people
Posted by PA on 15th of Oct 2010 at 11:46 am
I was assuming most people have some exposure to it. Some have huge exposure.
to bring the discussion on
Posted by hazbin1 on 15th of Oct 2010 at 12:22 pm
to bring the discussion on real estate full circle, imho, holders of MBS and many mortgage derivatives have a PUT back to the originators of the securities in the event of 'bad faith' transactions or technical paperwork errors . this bypasses any monies set aside in a reserve for bad loans. thus many of the large banks/brokers will be on the hook for these puts. fnma and freddie already have at least $3 billion in puts back to originators (and I'm sure more in waiting with what is going on now). thus reviewing charts on FAZ and SRS would be appropriate. reserves for these puts as they are non existent (BOA hasn't reserved for this for its Merrill originations or any other company acquired past 2 years), while reserves for delinquent mortgages are inadequate for mortgages which can't be foreclosed on. the FED is keeping rates low and POMO has to be active to give banks the opportunity to make money (increase their tier 1 capital) to offset the above. while the overall trend of the mkt is up (at the moment), there are shorting opps in sectors. low rates for an extended period is vital to the FED to get people to refinance their mortages which in turn will remove some of the 'faulty' mortgages outstanding before they go delinquent.