Wednesday, February 14, 2007

WSJ article on Mortgage bond Meltdown

Efforts by major banks and Wall Street firms to unload bad U.S. housing loans are speeding up a shakeout in the subprime mortgage industry.

As more Americans fall behind on mortgage payments, Merrill Lynch & Co., J.P. Morgan Chase & Co., HSBC Holdings PLC and others are trying to force mortgage originators to buy back the same high-risk, high-return loans that the big banks eagerly bought in 2005 and 2006.

The MSM has awoken to the fact that the MBS market is toast.

Investment-banking firms and investment firms that bought mortgage-backed securities are hiring firms to scrutinize subprime portfolios for loans that violate contracts.

Clayton Holdings Inc. is working with a half-dozen investment-banking firms to identify loans that should be repurchased. Clayton has also been hired by two hedge funds to review mortgage bonds they own for potential repurchases.

The bag holders realize they are holding a "hot potatoe."

Credit Suisse analyst Rod Dubitsky said he expects repurchases to continue to rise for the next six months.

Umm... wait a second. Current repurchases are bankrupting the mortgage companies. Six more months of RISING buybacks?

This means only one thing.

Got popcorn?


Hunkston said...

Who should I get in contact with about a states own laws about mortgage broker bonds and as such, how would I get a mortgage bonds form? I life in England and am considering moving to America, don’t know where yet however I was doing some general reading about housing and came across the term mortgage broker bonds and am a little confused, is it a mortgage or a loan to acquire a mortgage?
Also if I want to set up life insurance do I need insurance bonds? Or can I simply open a policy with a company? I’m a little confused by some of the jargon. I am not moving anytime soon but thought I should be aware of things I will need to understand.

JJ said...

Can you tell me what Surety Bonds are? I have heard of Corporate Surety Bonds but I don’t understand what they are, can you help?