Tuesday, October 12, 2010

Foreclosure halt could hit investors

I still think this temporary.  Servicers and lenders will find a way to market fix all the legal loop holes.  I think investors are little more cautious due to the ratings of these bonds.

The Securities Industry and Financial Markets Association said foreclosure processing mistakes should be fixed but said dramatic nationwide action could unjustly impose losses on investors in the housing market.
"It is imperative, however, that care be taken in addressing these issues to ensure that no unnecessary damage is done to an already weak housing market and, in turn, that there is no further negative impact on the economy," SIFMA Chief Executive Tim Ryan said in a statement
"What we've added is an element of legal and political risk to the mortgage market that will ultimately get priced in," Gaines said.
I think these risks were always priced in, but the industry tried to do 0% down loans and then tied to price out the risk.  If we we returned to pre-1996 loan underwriting practices the mortgage industry would return to normal.

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