s l o w l y. . p u l l i n g. . t h e. . b a n d a i d. . o f f . . .

Prices WILL continue to be discovered as defaults trump opacity. Acct'g 101: as equity and liabilites decrease, so do assets. Lather, rinse repeat until confidence in repayment of equal value is restored. Say, in four to seven years?

Why the optimism "this" war thing will end?

Mayan calender ends on December 21st, 2012 A.D

CR, a small RE related dictionary would be very useful for an average reader.
just a hint, & thanks for the valuable info.

Jackk,

Securitizations usually carry additional protection ("credit enhancement") above and beyond the collateral itself. That might be over-collateralization (you put up $110MM in loans to back a $100MM securitization), bond insurance from the likes of FSA, etc. Generally, the better the perceived credit quality of the deal, the less additional protection that was required.

Fannie Mae will need to raise $5 billion to $10 billion

Covered Bonds; repackage old debt into new synthetic entity:

–Repackaging of Stressed Corporate and DistressedStructured Finance Assets A distressed security of substantial size can be a good candidate for repackaging. The MH sectorhas supplied much raw material for repackagings. However, most of the best opportunities forrepackaging distressed MH ABS have already been exploited. An ideal case for repackaging iswhere a security's rating and its pricing conflict. The best repackaging candidates now arguably arethe ABS CDOs from 2000 and 2001. Those deals tend to have high concentrations in MH, franchise,and other troubled ABS asset classes. Dealers have looked at many potential opportunities in doing repacks. However, there is now such astrong bid for unrated collateral that much of the motivation for doing repacks has been eliminated.One panelist contends that equity and senior debt should like combo notes. Holders of mezzaninetranches should be wary of them. Repacks and CDOs^2 arguably make market participants slaves to the rating agency methodologies.The risk for a manager or structurer is putting his own judgment and experience aside just to followthe rating agencies' models. A different panelist contends that his firm has not been able to makecombo notes fit within the constraints of the rating agency methodologies. Analytics, Transparency, Liquidity: Synthetic CDOs^2 permit investors to drill down to the underlyingexposure and to apply rigorous analytics. However, in dealing with distressed managed deals, thosesteps may not be practical. The technology is all there with Intex. The whole game is in picking assumptions. In both the synthetic market and the cash market, correlation is the big uncertainty. The difference isthat the synthetic market allows hedging correlation while the cash market does not. Another panelist contends that the analytics have come very far and are very "tight." That makes itharder to make money (because many market participants use the same valuation methodologies). Itmeans that pushing into distressed credits is more necessary as a strategy for making money.

In the CDO context, the term "combo note" generally refers to an instrument created by combining two separately rated tranches of the same deal. For example, combining the triple-A and triple-B tranches of a dealmight result in a single-A-rated combo note

CDO Squared = The seventh number is 7 squared (72 or 7×7) etc

CDO Cubed = The seventh number is 7 cubed (73 or 7×7×7) etc

CDO/Covered Bond Fibonacci = The next number in the sequence above would be 55 (21+34)

All your ARSes are belong to us.

Collateralized mortgage obligatio - Wikipedia, the free encyclopedia

Shortly, the oil and gold markets will pass by the RE market in terms of % losses from the top. Other commodities already did. Who could have known?
O-Joe

CDO background from several years ago: Collateralised debt obligation (CDO) managers and other crediti ntermediaries buy leveraged loans and repackage them into tranches with different risk-return objectives, which are sold to a wider investor base.

A mortgage bank originates a portfolio of fixed-interest loans, collateralised by commercial property. It sells the portfolio to a third party special purpose vehicle (SPV), set up by an investment manager or an investment bank. This portfolio will offer a yield premium over government bonds to reflect the risk of default and other risks. The SPV then sells all or part of this risk on by issuing a series of bonds or notes, collateralised by the underlying mortgage assets, but whose individual risk and return characteristics have been reshaped to cover a wide spectrum of risk and return appetites. These new "structured" assets are examples of SCAs. Each "tranche" of the new bonds will usually be rated by one or more rating agency (except for the most junior tranche, which is normally unrated) and then sold to the market by an investment bank. This kind of SCA is known as a CDO and because in this case it is made up from commercial mortgages only, it would usually be referred to as a Commercial Mortgage-Backed Security (CMBS) CDO. CMBS and other types of instrument (including other CDO's) are sometimes repackaged with other forms of debt to form new CDOs.

Repackaged pools of restructured subordinated garbage; See Covered bonds

One issue with CDO's is the way in which they (like Covered bonds) are, have or will be used in hedging strategies, which FAIL, i.e, the collateral initially used, which is fragmented and chopped into parts from the whole are connected to a very tangled mess. One interesting part of this is the base for these little entities which use fixed-interest loans, like mortgages from which to grow and reproduce like bunnies, which is thus related to the reference about to Fibonacci-like sequencing and the morphing ability used by these clever bankers to turn thin air into massive debts -- very amazing trick!

Calgary, AB is much like houston - an oil town - and the mood there is nothing short of jubilation and excess.

Thank Christ for China..............

rs: you seem correct...the link states that DSL is not allowed to make any new loans without OTS approval. The company is essentially being run by the OTS...might as well make it official and shut them down.

Look at the people you are driving with in traffic next time you are out. Ask: "Does that person have $50,000 cash to put down on a house?"

Funny story, I forgot to bring a company check to Costco so I decided to just put it on my debit card and get reimbursed. The person I was with was amazed I could put $700 on a debit card. This is somebody who just bought a condo in 2005...

The point being that most people think it's amazing that you have $1000 saved up, much less $50,000.

Not many people have 50K saved up. Nor could they hope to based on salaries.

That's why the price of houses has a long way down yet.