Actually S896 is very bearish. Banks will now take into account that they may have to eat additional losses on what is a securitized loan. Their response will be to increase interest rates on all of these loans and treat them more like seconds than fully securitized. (risk adjustment to the interest rate)

It is short time bullish because the houses that are near NOD or at NOD will never make it to the market, drying up some of the potential inventory, but long term it may be a total disaster. I estimate that the amount it will cost in terms of interest is an additional 1% to 2% on the interest rate.