Decline in Real Estate

[Jared I]

While I agree with John that Banks don't like REO, I see some problems.

First the WS banks bought alot of these loans repackaged them and old this MBS to hedgefunds, pensions and investors. As these MBS start showing more deterioration the investors will want the WS lenders to buy them back and the lawsuits will start. Say the lenders do want to work something with the buyers at 30 yr 7%, how many J6Ps will want to chase a degrading asset when they are behind, how many J6Ps can qualify for the new loan when they used a NINJA or NINA to get the first loan and how many can pay 7% when they are strecthed with their IO or ARM?

Next how will WS, pension funds and investor write downs affect the economy and job market? If people aren't buying how will this affect the construction trades? And how does a MBS holder seek foreclosure, throught the servicing company? REO owned by Hawaii/Colorado/California State Pension? This will be interesting.

I say jingle mail will be the order of the day.