Posted on 06/29/2007 5:48:25 PM PDT by DeaconBenjamin2
US regulators on Friday told banks to be more lenient with subprime mortgage borrowers in difficulties, potentially compounding uncertainties in the troubled mortgage securities market.
The bank regulators issued guidance urging lenders to work with borrowers, for example by modifying loan terms.
Such changes could affect the value of securities backed by subprime loans, which have already fallen sharply following a recent surge in defaults.
“Banks will have to work out how to reconcile the requirements of the regulators and the interests of holders of mortgage securities,” said one official.
American International Group has said implementing the guidelines will cost it at least $178m, while Washington Mutual has committed to cut rates on up to $2bn of subprime loans, some of which have been securitised.
The turmoil in the mortgage-backed securities market has brought two Bear Stearns hedge funds near to collapse, spreading wider concerns across credit markets. Richard Marin, Bear’s head of asset management, on Friday became the first high-profile casualty when he was replaced by Jeffrey Lane, a senior Lehman Brothers executive.
* * *
Morgan Stanley estimates the total volume of CDOs issued since the start of 2005 with some subprime mortgage exposure is about $550bn.
(Excerpt) Read more at ft.com ...
My interest is in holding securities that don’t represent non-performing loans. How the heck are they going to resolve the conflict between that interest and the desire to reward stupidity? They’ve been given orders simultaneously in all directions.
“orders to march off simultaneously”
The banks deserve to take a hit for handing out money like a drunken sailor. Serves them right. It also serves America right for being credit abusers. Yeah, yeah, yeah - I know a bunch of folks will call me anti-American, but not owing anyone money is the first step to financial independence - right now we have an underclass of people who are in bondage to the banks. And none of these people should’ve been allowed to borrow so much in the first place! It was irresponsible of the banks to lend to these high-risk losers.
Why? So the rest of us can pay more for their stupidity??
Sounds like the regulators want sub-prime troublees to be treated as welfare recipients. Except they want to dump the financial burden onto...well, onto everyone EXCEPT the sub-prime troublees?
Sheesh.
MM (in TX)
Why? The borrowers should have read the terms before they signed their mortgages. That’s the problem with this country today: Lack of personal responsibility!
“orders to march off simultaneously”
Lash LaRue rushed out onto Sally Lou’s front porch and leapt off it, landing smartly in the saddle securely belted to his trusty stallion, and rode off in all directions at once.
By rewarding stupidity.
You all miss the point. These are subprime loans
to ILLEGAL aliens. If these were citizens, well that would be a different matter.
1) It's for the children.
2) Women and minorities were hurt worst.
3) To demonstrate our compassion.
4) To penalize those evil people who make money off the suffering of others.
So the rest of us can pay more for their stupidity??
Exactly.
I bet that smarts.
Landing on the saddle horn was known to alleviate horniness.
ping
“rode off in all directions at once”
The hazard of using a four-point on your horse, then forgetting to un-tie it.
It's still a legal contract. Foreclose and resell the property. Deport the illegal aliens. It's a win/win.
BTW, my son is a broker/lender in San Diego. He has been listing and moving these properties for the banks. The banks are happy to get them listed and sold to a qualified buyer...ASAP. They are in the interest collecting business, not the property owning business.
No, you want the bank to foreclose, resell the property at a loss and then collect the difference off of mortgage insurance so the lender has no loss.
I did not know that lending was a zero risk business.
Sort of like being the losing bidder for a road project in Texas, you still get paid.
That's the likely scenario as properties go upside down and loans reset.
I did not know that lending was a zero risk business.
It's not. That's why subprime loans carry higher interest rates. The risk limiting factor in a real estate loan is the ability to foreclose and resell the property to a qualified buyer to recapture your principal. It doesn't always work out. That's the reason for requiring the payment of private mortgage insurance until the buyer has sufficient equity in the property.
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