Comments on: An Update on Housing Market Downside http://www.nakedcapitalism.com/2007/10/update-on-housing-market-downside.html Sun, 22 Nov 2009 02:09:47 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: tom stone http://www.nakedcapitalism.com/2007/10/update-on-housing-market-downside.html#comment-1238 tom stone Fri, 26 Oct 2007 02:43:00 +0000 http://www.nakedcapitalism.com/2007/10/an-update-on-housing-market-downside/#comment-1238 The problems with option Arms have been obvious since they were first used as an "affordability" product.I live in sonoma county and the median price is still more than 9x median income.Another set of problems these loans have is that many were used to purchase badly built homes far from economic centers...many of he are also oversized two story energy hogs totally unsuitable to an aging populace or the average sized family.thus when people once again decide to buy,and can afford to,they are unlikelyy to want a 3800 sq foot 2 story home in patterson or el dorado hills that is falling apart at the seams at age 5. The problems with option Arms have been obvious since they were first used as an “affordability” product.I live in sonoma county and the median price is still more than 9x median income.Another set of problems these loans have is that many were used to purchase badly built homes far from economic centers…many of he are also oversized two story energy hogs totally unsuitable to an aging populace or the average sized family.thus when people once again decide to buy,and can afford to,they are unlikelyy to want a 3800 sq foot 2 story home in patterson or el dorado hills that is falling apart at the seams at age 5.

]]> By: bob http://www.nakedcapitalism.com/2007/10/update-on-housing-market-downside.html#comment-1236 bob Thu, 25 Oct 2007 19:02:00 +0000 http://www.nakedcapitalism.com/2007/10/an-update-on-housing-market-downside/#comment-1236 <i>option ARM loans are emerging as a new source of default worries. This is troubling for two reasons. First, they heretofore haven't been viewed as a source of risk (hence existing estimates are likely to be too low). Second, because they weren't regarded as risky, they weren't given extra credit enhancement in structured finance deals.</i><br/><br/><br/>That, combined with the graph shown in http://www.nakedcapitalism.com/2007/10/why-countrywide-is-modifying-mortgages.html, and the comments on leveraging, is utterly disheartening.<br/><br/>It sounds like '10 and '11 will be inconceivably bad. option ARM loans are emerging as a new source of default worries. This is troubling for two reasons. First, they heretofore haven’t been viewed as a source of risk (hence existing estimates are likely to be too low). Second, because they weren’t regarded as risky, they weren’t given extra credit enhancement in structured finance deals.

That, combined with the graph shown in http://www.nakedcapitalism.com/2007/10/why-countrywide-is-modifying-mortgages.html, and the comments on leveraging, is utterly disheartening.

It sounds like ‘10 and ‘11 will be inconceivably bad.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/10/update-on-housing-market-downside.html#comment-1233 Anonymous Thu, 25 Oct 2007 11:55:00 +0000 http://www.nakedcapitalism.com/2007/10/an-update-on-housing-market-downside/#comment-1233 "We are seeing some of that unraveling now. One can only hope that some of these players cut their leverage or sold assets before things got ugly."<br/><br/><br/>Note: Cutting leverage can mean fa few things including selling what you can (liquid more profitable investments) and holding what you cant: CDO/CLO...etc garbage...and marking to fantasy until the house of cards falls.....<br/><br/>Another issue is: who do these players sell to you mention above....the stuff is still toxic waste no matter who holds it....that fact that its leveraged up with Ponzi capital just points back to a credit bubble deflating/shrinking and pulling the supporting Ponzi Capital with it.....<br/><br/>The beautiful part of "sell what you can" as this waste devalues is that all the crap that traders value "mark to fantasy" stays on their books while the assets they can sell go back into the system..(granted it pressures)...But those players end up with all the crap int their portfolio at the end of the day.... “We are seeing some of that unraveling now. One can only hope that some of these players cut their leverage or sold assets before things got ugly.”

Note: Cutting leverage can mean fa few things including selling what you can (liquid more profitable investments) and holding what you cant: CDO/CLO…etc garbage…and marking to fantasy until the house of cards falls…..

Another issue is: who do these players sell to you mention above….the stuff is still toxic waste no matter who holds it….that fact that its leveraged up with Ponzi capital just points back to a credit bubble deflating/shrinking and pulling the supporting Ponzi Capital with it…..

The beautiful part of “sell what you can” as this waste devalues is that all the crap that traders value “mark to fantasy” stays on their books while the assets they can sell go back into the system..(granted it pressures)…But those players end up with all the crap int their portfolio at the end of the day….

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