5 replies to this topic

[SandStorm]

I was wondering about Dodd - Paulson - Bernake meeting earlier but now I know that they were concerned about the ARMs reset and they want to get Fannie and Fraddie to help out in case bankers aren't willing.

[SandStorm]

I gotta say that's smart. If this shi* gets deeper, and it will, monetary policy alone isn't going to solve the problem. We will also need some fiscal stimulus as well.

[ogm]

Of course they will do everything possible to prevent people from losing their homes. It was absolutely stupid to bet otherwise.

[humble1]

yes, eventually, i think they will. but how much will this really "help" people. frankly, many of them should not own homes. that is a responsibility level which is lost in all the home-ownersuip hype. there are lots of maintenance expenses; many of these folks cannot afford the taxes and insurance. and then there is the VERY IMPORTANT issue of credit scores as an indicator of reliability and integrity. subprime is not just about money.

[SandStorm]

Of course they will do everything possible to prevent people from losing their homes.

It was absolutely stupid to bet otherwise.

Why is that? Sure, the help will come, it's the only way to safely deleverage this country. But the floor in stocks could be at lower levels. We barely breached the 10% down last week and markets bounced back like it was the buy of the century. Well, if you want the shares so bad you can have them I'll say. I am still seeing it as shorting opportunities.

[U.F.O.]

Exactly how can FNMA, Freddie Mac or HUD solve the ARM reset problem. Mortgage lenders have already begun trying to extend payment schedules to help with defaults and foreclosures. Those ARM loans are swapped in the derivatives' markets. The agencies can't just "give" the borrowers a free put to get out of their gross loan rates resetting higher. A loss will have to be incurred somewhere in the securitization process. A big one. The ultimate responsibility rests with the borrower. I predict apartment occupancy levels will skyrocket over the next several years as homeowners bail. U.F.O.