Daniel, I read a number of Cagan’s reports, and found his earlier work quite good, his later work full of flaws, as he makes one serious omission: he ignored CLTV and erroneously lists LTV as CLTV. Let me explain: Fannie Mae and other agencies do *not* keep track of the piggyback loans. If you get an 80/20, they record the 80% part, for a LTV (loan to value) of 80%. So a 100% CLTV (combined loan to value) loan is recorded as an 80% LTV. Cagan does this in one of his entire reports. Since you have already read this report, perhaps you could answer if he takes CLTV into account properly.
The Mortgage Bankers Ass’n and Fannie Mae have publicly acknowledged these loans are a concern, and they don’t know how widespread the problem will be. I bet they could find out if they really wanted to, but why should they? They’ll just say enough to CYA, so they can say later they warned people about this coming down the pike. It’s not a coincidence or conspiracy that the media is jumping on these stories. The exotic loans are a true concern..
