You’ve got it right ,,, the models were fine when we were sailing up but the flaws were there all along and the “dumb and dumber” ratings of the CMO pools were built on the sand of “liar loans” , homes sold to illegals (which is why all of the $120k and under properties disappeared over the last 5 years throughout the country) and grossly negligent lending in the form of balloons and interest only negative ammorts ... Whats really going to get hurt are the people that make toys ,, boats ... motorcycles ... big screens... high end stuff that you want but don’t need... and people that are forced to move and can’t hold the current property as a rental or such until the market improves..
I would like to see lenders forced by the buyers of the CMO pool instruments to redefine their programs so that their income does not come from absurd fees at closing but rather from interest over the life of the loan... most originators would write a loan for anyone knowing it would fail a few years down the road as they would sell the bad loan into a package and they already had made their cut...
Hey Neidermeyer - are we the only guys to see through this fiasco? (see post 55)