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Post by jeffolie on Jul 27, 2007 12:56:23 GMT -6
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Post by jeffolie on Jul 27, 2007 13:08:30 GMT -6
Foreclosure rates could soar Moody's Economy.com forecasts that defaults won't peak until 2008 due to ARM resets and falling home prices. By Les Christie, CNNMoney.com staff writer July 26 2007: 5:21 PM EDT NEW YORK (CNNMoney.com) -- The already poor performance of many mortgage loans will worsen substantially through the rest of the year, according to an analysis released Thursday by Moody's Economy.com. The company predicts that 2.5 million first mortgages will default this year, with little chance for improvement soon - Economy.com expects delinquencies to peak in the summer of 2008 A shock, such another major hedge fund meltdown, as two Bear Stearns funds recently experienced, could cause a "crisis of confidence," according to Zandi and usher in a period of "investor freeze" leading to lower liquidity. "And credit," he said, "is the lifeblood of the economy." money.cnn.com/2007/07/26/real_estate/deelinquencies_to_soar_in_2008/index.htm?postversion=2007072613
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Post by unlawflcombatnt on Jul 27, 2007 13:14:51 GMT -6
" the strategists noted, adding that Fannie and Freddie's retained portfolios contain roughly $182 billion of subprime bonds, most of which are rated AAA...."
It doesn't really matter if their subprimes are "rated" AAA. The bonds are based on high-risk subprime mortgage bonds, which would have been rated lower (BBB or BBB-), if they hadn't been "packaged" to allegedly reduce the risk.
Even their so-called "prime" mortgages are at risk, as housing prices sink and defaults increase.
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Post by jeffolie on Jul 27, 2007 13:39:05 GMT -6
Increasingly the ABX derivatives of AAA have been declining.
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Post by jeffolie on Jul 27, 2007 15:29:53 GMT -6
Fannie MBS Issuance Hits 2-Year High Fannie Mae issued $53.1 billion of mortgage-backed securities in June, the highest level since it issued $61 billion in September 2005, according to the government-sponsored enterprise. Fannie's monthly summary also reported that $47.2 billion of the $122.8 billion of nonagency mortgage securities in its portfolio as of the end of June were backed by subprime loans. Of the $47.2 billion, approximately $46.9 billion was rated triple-A (or the equivalent) by at least two nationally recognized rating agencies, and none of the subprime-backed MBS had been downgraded, Fannie Mae said. The GSE's gross mortgage portfolio grew to $722.5 billion in June, up from $718.3 billion in May but down from $730.9 billion a year earlier. Fannie Mae can be found online at www.fanniemae.com.
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Post by unlawflcombatnt on Jul 27, 2007 15:58:38 GMT -6
Jeff, Thanks for the link. From the above link the numbers can be seen in tabular form. I'm not completely sure how to interpret the numbers in the tables. How much of Fannie Mae's $2.2 trillion of MBSs and "Other Guarantees" are backed by the taxpayer? In other words, how much of this money would taxpayers have to foot the bill for if Fannie Mae collapsed? Just the $722 billion in the Mortgage Portfolio? Or the entire $2.6 trillion listed as "Total Book of Business"?
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Post by jeffolie on Jul 27, 2007 16:08:13 GMT -6
The disclaimer on the Fannie Mae and Freddie Mac website say that they are NOT backed by the full, faith and credit of the US government. "Fannie Mae's debt securities are unsecured obligations of the corporation and are not backed by the full faith and credit of the U.S. Government. Last Revised: July 07, 2006 www.fanniemae.com/faq/faq10.jhtml?p=FAQThat being said, the US government probably will bail them out.
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Post by rjfliberal07 on Jul 28, 2007 22:58:45 GMT -6
Well, if the Government bails them out, then there goes then dollar down the crapper. Better invest in a good wheelbarrow.
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Post by beachbumbob on Jul 30, 2007 5:45:01 GMT -6
The disclaimer on the Fannie Mae and Freddie Mac website say that they are NOT backed by the full, faith and credit of the US government. "Fannie Mae's debt securities are unsecured obligations of the corporation and are not backed by the full faith and credit of the U.S. Government. Last Revised: July 07, 2006 www.fanniemae.com/faq/faq10.jhtml?p=FAQThat being said, the US government probably will bail them out. china may be learning another tough lesson...
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