Posted on 08/16/2007 5:33:38 AM PDT by Hydroshock
He’s the one letting the actual funds rate fall to the mid 4’s in spite of the target rate being 5.25.
4.71 yesterday, but 5.41% last week (with a target of 5.25%!).
What do you expect? The crisis started on 08/09.
The Fed rate hold announcement was 8/7.
And your point is?
The markets reacted/noticed the liquidity crisis 8/7 and 8/8.
By 8/9 the Fed had effectively raised interest rates, instead of lowering them...probably not deliberately, they just haven’t grasped the magnitude of this problem yet, even though they see the Secondary market frozen.
I think the Fed is being a lot more attentive this week than last, except for Poole who proved himself an arrogant idiot today.
Is that an answer to my question? If it is, thank you, but the meaning escapes me. I suppose the term "bundled" is obvious enough, but "staggered" finds little place in context for me. As I've already stated, I'm not a finance guy at all.
C-Wide did not write my note, they bought it. I borrowed from PRMI, then soon got notification that my loan had been purchased by Countrywide. If your question was aimed at me ... does that answer it? 'Cause, I dunno for anything further.
I do not need to understand "bundled and staggered", I just asked "Should I worry?". Nevertheless, in a thread full of people sharing their massive financial savvy ... who must obviously know whether or not I should worry ... you are the only one who even stooped to acknowledge my existence, so thank you.
I’m sorry. I meant you should not worry.
the loan is likely though not definitely no longer owned either by PRMI or Countrywide.
large blocks of loans are “bundled” at varying rates and maturity dates as a “staggered return” investment.
and these bundles are bought and traded by securities folks specializing in them and needed by folks needing long term secured investments that should beat the standard T-bill rates.
most often pension fund managers, insurance companies and other large institutional investors
further....and this is most critical.....a mortgage (commercial and residential) is only subject to be called if one is in default by non payment or non-performance of some covenant to the loan....or in the case of commercial loans....at the end of the up front balloon.....which is a temporary interest rate period of usually 3-5 years from the start of the loan.
just because your lender goes broke does not mean you with a mortgage they funded is in danger of anything except learning one day someone else owns your mortgage and you send your monthly check to another address.
the losers at these mortgage company bellyups are the shareholders and employees......
Somebody finally woke up the Fed!
http://www.bloomberg.com/apps/news?pid=20601087&sid=a8_CLssc9kr8&refer=home
It’s a token move. Very few banks use the discount. They are usually in bad shape and out of alternatives when they do.
That was pre-2002. Prior to 2002, using the discount window triggered an automatic federal audit of your bank...so only desperate banks used the window.
Post 2002, healthy banks routinely use the discount window now because it no longer triggers an automatic federal audit.
It maybe routine compared to what it used to be, but I doubt it’s routine compared to using the funds market. I had no idea the spread was so high, 6.25 compared to 5.25. I thought it was normally around a half point difference. But thanks for the info. I’d pretty much forgotten about the discount window.
That should get its own thread.
I don’t know. That sort of thread would be filled with so many stupid comments about “Let the banks burn” from idiots who think that they want a world without banks...
I’m in a similar situation to you and have had no problems to speak of.
What must be considered is the stack of papers developed at closing. Is there for instance a clause that says “In the event of the bankruptcy of the mortgage holder, the contract is void and the lendee is off the hook scott free”
or a clause that says” in the event of a bankruptcy by the mortgage holder, the trustee may sell the oan to a new holder who can change the terms as he sees fit”
Thanks! That’s what I thought.
I’ll have no problem holding up MY end of the deal.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.