I was just reflecting on the very nature of home financing moving in the direction of auto finance. It seems, and my perception may be wrong, that a great deal of the sub-prime and loans other than prime are ending up in packages very similar to auto loans and the like – the abs’s that you mention. And your terminology of it turning on and off resounds with me as the rating from the credit rating agencies could affect the market within minutes of a decision regarding how packages will be rated. The ratings affect Wall Street’s ability to market the securities and debt obligations so an increasingly large part of the mortgage market is subject to more volatility. Basically, you don’t have the endorsement and encouragement of the government to fund lower quality credit (other than FHA) or the bank’s being asked to provide targeted credit.
It seems as though a number of people in the mortgage field packaging loans have migrated over from the finance company and auto credit side of business – not that this is bad, it appears to just be a trend.
