And so it begins. The bailout to end all bailouts government involvement in the markets on a level not seen since the resolution of the S&L crisis Lehman Brothers expects about 2.8 million subprime mortgages to reset in 2008 and 2009 about 30% higher The questions that remain is whether intervention in these markets will produce an solution that will enhance the value of the vast supply of mortgages “The cost of this is, actually, going to be absorbed by investors in mortgage-backed securities,” they write. “This is why ‘good credit’ borrowers are not going to be ‘rewarded’ — because investors cannot be brought to forgo that much interest.” The double-A rated ABX was traded at 39.8 cents on the dollar this morning, as investors still see very little value being recovered from those loans. |
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