Post by jeffolie on Aug 10, 2007 14:26:15 GMT -6
...mortgage derivatives market is literally frozen,...
...Country Wide is having to carry mortgage originations ...
...– which is going to totally kill the US mortgage market...
...derivatives losses are snowballing...
The mortgage derivatives market is literally frozen, and no one will buy either the derivatives, nor buy mortgage originations, which is now paralyzing the US mortgage market. US lender Country Wide is having trouble selling its new mortgage originations – and having to carry them. Country Wide accounts for a huge 25% of the US mortgage market.
Mortgage lenders are stating that the mortgage market is in worse shape than they have ever seen. Investors are not buying mortgages, causing lenders to have to carry their own loan originations – which is going to totally kill the US mortgage market if things are not fixed soon. Alt A and sub prime mortgages (30% of US mortgages) are not selling – investors want nothing to do with them.
As these mortgage markets become illiquid, the trillions of dollars of mortgage derivatives – which EU banks have bought heavily – cannot be valued – which caused Paribas to have to freeze redemptions in their 3 funds which held those derivatives.
The implications of that situation is having broad and very bad ramifications to the world banking/financial industry which is wondering how bad things will get. Things are quite bad now, to say the least.
You cannot have multi $trillion markets just stopping – with out major building losses.
The ramifications of the US mortgage derivatives losses are snowballing, and it is being said that this is unprecedented. The present situation has already been compared to the 1987 financial crash in severity.
www.financialsense.com/fsu/editorials/laird/2007/0810.html
...Country Wide is having to carry mortgage originations ...
...– which is going to totally kill the US mortgage market...
...derivatives losses are snowballing...
The mortgage derivatives market is literally frozen, and no one will buy either the derivatives, nor buy mortgage originations, which is now paralyzing the US mortgage market. US lender Country Wide is having trouble selling its new mortgage originations – and having to carry them. Country Wide accounts for a huge 25% of the US mortgage market.
Mortgage lenders are stating that the mortgage market is in worse shape than they have ever seen. Investors are not buying mortgages, causing lenders to have to carry their own loan originations – which is going to totally kill the US mortgage market if things are not fixed soon. Alt A and sub prime mortgages (30% of US mortgages) are not selling – investors want nothing to do with them.
As these mortgage markets become illiquid, the trillions of dollars of mortgage derivatives – which EU banks have bought heavily – cannot be valued – which caused Paribas to have to freeze redemptions in their 3 funds which held those derivatives.
The implications of that situation is having broad and very bad ramifications to the world banking/financial industry which is wondering how bad things will get. Things are quite bad now, to say the least.
You cannot have multi $trillion markets just stopping – with out major building losses.
The ramifications of the US mortgage derivatives losses are snowballing, and it is being said that this is unprecedented. The present situation has already been compared to the 1987 financial crash in severity.
www.financialsense.com/fsu/editorials/laird/2007/0810.html