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Preview: Comments on: We All Really Should Have Known Better This Time Around

Comments on: We All Really Should Have Known Better This Time Around



Examining the home price boom and its effect on owners, lenders, regulators, real estate agents and the economy as a whole.



Published: Thu, 22 Feb 2018 21:44:41 +0000

 



By: AndyInJersey

Thu, 16 Aug 2007 14:12:13 +0000

Just Say No. LOL Apparently this isn't a Drug Free School Zone.



By: AndyInJersey

Thu, 16 Aug 2007 14:05:22 +0000

You in Jersey? I'm in Gloucester Township. Did/do a lot of fishing in the Delaware Bay out of the Maurice River. Seems to be drying up the past few years. Apparently a lot of stripers, but not much else other than big sharks. Back in the day you could go out there and load the boat with 50 or 60 flounder and weakfish. Not much out there anymore. And I don't think it's the small fisherman either. 150 boats out there catching 30 keepers each on saturday and sunday in the summer ain't gonna kill off the fish as much as fertilizer run-off from McMansions and dragnet fishing boats that pull 2,000 each time they dip the net.



By: AKron

Thu, 16 Aug 2007 07:11:08 +0000

"Will it really be worth it to the ultra-wealthy when they daren’t go out in public unless heavily bodyguarded, or live in a palatial home unless under constant, heavy security?" Sadly enough, to most of them, it will be worth it. Note all the gated communities and security companies around already. Anyhoo, how will we ever have a good 3rd world economy if we don't get a 3rd world elite? ;|



By: AKron

Thu, 16 Aug 2007 06:26:28 +0000

" Romney spokesman Kevin Madden says the investment is held in blind trust. "All the decisions with regard to the trust are made by the trustee, without any knowledge from the governor." Argh! Can't politicians quit lying for a second?!?! This same thing came up with Cheeny. If all the decisions are made by the trustee, it is not necessarily a blind trust. It is a blind trust (note the word blind) only if the politician does not know about the holdings at all. Since he knows what is in his trust, it is not a blind trust, and is obviously a source of conflicts of interest.



By: AKron

Thu, 16 Aug 2007 06:07:03 +0000

She should quit whining... 8.75% on 100 LTV Stated is a sweeeet deal, nowadays (see the latest Countrywide rate chart- they won't even do over 90 LTV Stated): https://www.cwbc.com/PdfFiles/WLDBC%20CA.pdf



By: AKron

Thu, 16 Aug 2007 05:41:17 +0000

First, you don't want to confuse REMICs and CDOs... Stage 1: A large number of mortgages are gathered, with similar characteristics (i.e. 1st lien, prime, less than 90 LTV), into a pool. One or more servicer companies will collect the payments, deal with foreclosures AND put some sort of guarantee on principal. Stage 2: Out of the value of all these mortgages, a series of tranches are created, say 80-85 percent in AAA, the rest in AA, A, BBB and equity tranches (these may or may not be fixed interest bonds). They are sold by a 'bond retailer' such as Citi. This is a REMIC. Stage 3: A CDO is created. It is much like a mutual fund (often closed), but made up of asset backed securities. Suppose that a particular CDO holds lots of BBB rated MBSs from the tranche described above. This pool is now, itself, converted into a series of tranches, for instance, an AAA tranche that gets first payment from the BBB bonds in the CDO. The CDO thus adds another layer of instability and complexity. I could easily see the AAA tranche of a CDO taking a much bigger hit than the AAA trance of the original REMIC. You also are right- the income stream of even the REMIC bonds can be disrupted. Also, the servicer guarantees could fail (if the servicer goes BK), and there is even a lot of risk due to the slowing market increasing the time to loan payoff (i.e. a refi), exposing the bond to more inflation risk- especially bad since interest rates are rising. So a multiplicity of blows are hitting the CDO paper at the same time.



By: Jim D

Thu, 16 Aug 2007 05:17:26 +0000

I'll give'em a dollar. Ta-da! There's a price!



By: David

Thu, 16 Aug 2007 05:16:19 +0000

dont forget n years of property tax and insurance. holding costs, decling value of dollar. 6% sales comission. 1.5% to the title company. maintenance and depreciation. 0% price gain for 3 years = 30% real loss



By: HK_Vol

Thu, 16 Aug 2007 04:12:24 +0000

The value of my dad's condo went from $110,000 (less than US$100 psf) to $300,000 at the top. It "might" sell at $225,000 today. That would be about a 25% decline. I'd be a buyer of a good quality place at US$100 psf off the beach, US$200 on the beach.... JMHO



By: tuxedo_junction

Thu, 16 Aug 2007 02:39:57 +0000

The AAA tranche is usually 80%, the intermediate tranche is 10%, the junk bond tranche is 5%, and the residual is 5%. If all of the loans default and the loss after the REO sales is say 35% then the AAA tranche gets a 19% hit, (35-20)/80. I don't think AAAs are trading at a 30% discount, I think that the credit default swap index for AAAs is at 30. This I believe means the cost of default insurance for AAAs has tripled. I believe the AAAs are at a 5-10% discount. Hedge funds that purchased AAAs with leverage probably have investor losses of 30% plus.



By: Dennis

Thu, 16 Aug 2007 02:37:53 +0000

“‘Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets,’ said Lawrence Yun, senior economist for the Realtors.” Lawerence Yun is another bubble head economist who cannot get out from behind his desk to see the real world of RE. We are no where near a bottom. Infact ,he probably cannot reach his own bottom because if he could he might see crap he has never seen before.



By: Thomas

Thu, 16 Aug 2007 01:40:38 +0000

With each lower tranche that gets wiped out, the upper tranches lose one more layer of cushion. That progressively increases the risk to the upper tranche, which pulls its value down. Think of it this way: Just because a fund has only suffered 50% losses and annihilated the lower tranches, doesn't mean it won't drop another 10% and damage the next exposed tranche.