[Ozzie]

What I continue to not understand is if these packages of bonds are really tied into the underlying mortgages for the duration or if they are just bought, sold, insured, sold again, etc. for a quick buck and commission. I have experience with hard money loans to people with issues, but the underlying worth of the property always motivated me to do the deal because I felt I could come out whole if things went wrong. I have a couple in BK court right now and expect decent results. The borrowers (developers) only went BK to buy time and they know the worth of the properties are much greater than our loans. I’ll post about them once it closes in the next 6-12 monts, but I get the feeling these CDO’s are just kind of made up products by investment banks looking for a commission and a gamble by their investors.

I appreciated the post and link by the other poster which went in to detail at the Bullion site. Good stuff.

[Ozzie]

What I continue to not understand is if these packages of bonds are really tied into the underlying mortgages for the duration or if they are just bought, sold, insured, sold again, etc. for a quick buck and commission. I have experience with hard money loans to people with issues, but the underlying worth of the property always motivated me to do the deal because I felt I could come out whole if things went wrong. I have a couple in BK court right now and expect decent results. The borrowers (developers) only went BK to buy time and they know the worth of the properties are much greater than our loans. I’ll post about them once it closes in the next 6-12 monts, but I get the feeling these CDO’s are just kind of made up products by investment banks looking for a commission and a gamble by their investors.

I appreciated the post and link by the other poster which went in to detail at the Bullion site. Good stuff.

[Ozzie]

I’m confused by how anyone values these CDO’s and I have a feeling that the issuers have no idea either. A typical foreclosure that takes a year to resell will probably result in a 30% loss for that particular loan if it was 100% financing and in a weak RE market. The numbers I’ve seen say that at worst 20% of subprimes go into forclosure. Using that math and assuming the other 80% perform at high interest rates between (8-14%) I don’t see how these guys are losing money. Now some of these funds are being forced to sell the loans for pennies on the dollar. If I had a a few billion dollars I’d love to buy as many subprime loans as you’ve got at the prices I’ve seen quoted. Service the debt for 10 years and rent the houses that the deadbeats default on and collect the high interest paymens on the others. Wait until the next RE upturn and then sell the property you’ve foreclosed on. I’ll bet a guy like Sam Zell is looking into doing something like this.

On another note, credit card debt is also resold in these packages and defaults there run twice as high as mortgage default (4% to 2% I’ve read) and it’s not secured. I’m wondering how the risks and rewards of these two types of debt track each other.

[Ozzie]

I’m confused by how anyone values these CDO’s and I have a feeling that the issuers have no idea either. A typical foreclosure that takes a year to resell will probably result in a 30% loss for that particular loan if it was 100% financing and in a weak RE market. The numbers I’ve seen say that at worst 20% of subprimes go into forclosure. Using that math and assuming the other 80% perform at high interest rates between (8-14%) I don’t see how these guys are losing money. Now some of these funds are being forced to sell the loans for pennies on the dollar. If I had a a few billion dollars I’d love to buy as many subprime loans as you’ve got at the prices I’ve seen quoted. Service the debt for 10 years and rent the houses that the deadbeats default on and collect the high interest paymens on the others. Wait until the next RE upturn and then sell the property you’ve foreclosed on. I’ll bet a guy like Sam Zell is looking into doing something like this.

On another note, credit card debt is also resold in these packages and defaults there run twice as high as mortgage default (4% to 2% I’ve read) and it’s not secured. I’m wondering how the risks and rewards of these two types of debt track each other.

[Ozzie]

When the bull RE market was in full effect Realtors would send out anonymous “offers” in the neighborhood where their clients wanted to live in – in the form of postcards, etc. Not many respond. If you’re desperate you can call the “I’ll buy your house” guys in the Union Trib. I’m sure that’s a good deal.

[Ozzie]

When the bull RE market was in full effect Realtors would send out anonymous “offers” in the neighborhood where their clients wanted to live in – in the form of postcards, etc. Not many respond. If you’re desperate you can call the “I’ll buy your house” guys in the Union Trib. I’m sure that’s a good deal.

[Ozzie]

There’s a reason they have to wear veils……

[Ozzie]

There’s a reason they have to wear veils……

[Ozzie]

It doesn’t matter if it is 6″ or 100″. HDTV is the bomb, but you need a quality TV displaying 1080i/p (preferably a Sony or Samsung) and not a Vizio from Costco.

If you watched the HR contest on ESPN-HD tonight at the All Star game you would agree. My wife who doesn’t watch sports thought she could see our old house in the Marin Hills on one replay. It was incredible.

[Ozzie]

It doesn’t matter if it is 6″ or 100″. HDTV is the bomb, but you need a quality TV displaying 1080i/p (preferably a Sony or Samsung) and not a Vizio from Costco.

If you watched the HR contest on ESPN-HD tonight at the All Star game you would agree. My wife who doesn’t watch sports thought she could see our old house in the Marin Hills on one replay. It was incredible.

[Ozzie]

<>

Wow. This site is so biased it’s scary. One post from someone buying a home and 30 posts shouting her down and telling her how crazy, greedy, stupid, etc. she is. Everyone is so judgemental. Live and let live. Reminds me of propoganda in the 30’s of a certain European country.

[Ozzie]

<>

Wow. This site is so biased it’s scary. One post from someone buying a home and 30 posts shouting her down and telling her how crazy, greedy, stupid, etc. she is. Everyone is so judgemental. Live and let live. Reminds me of propoganda in the 30’s of a certain European country.

[Ozzie]

Cyphire,

My major was CS but that was programming in FORTRAN and goofy stuff like that. I went into sales with a small software company and we kept getting bought out and I kept outselling everyone. Perfect path if you are hyper competitive about 10% of the time and lazy the other 80%. See I can’t even do math.

[Ozzie]

Cyphire,

My major was CS but that was programming in FORTRAN and goofy stuff like that. I went into sales with a small software company and we kept getting bought out and I kept outselling everyone. Perfect path if you are hyper competitive about 10% of the time and lazy the other 80%. See I can’t even do math.

[Ozzie]

Dropped out of Big Ten school 20 years ago. Did well in several software companies in the 80’s/90’s. Stopped working to invest/slack off (which I’m good at – slacking that is). Made over $500k last year but will probably make less than 100k this year.

Live below my means. Think North County is prety much Heaven compared to where I grew up.

[Author]

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