A friend of mine recently commented on one of my posts - why does not the mortgage insurance cover the foreclosure loss. I tried to give an explanation in the space of a comment, to explain that the problem is not the loss on the principle from the foreclosure sale, or even the loss from the drop in market value.

It is the loss on the stream of future income. These mortgages were sold based on the value of the stream of future payments.

Jan Wood, a real estate agent and top blogger from Nashville, has posted a video from 60 minutes. This video gives a more complete answer. The issue is not that 6% of homes are being foreclosed on. The issue is the loss under an unbelievably vast market that offered guarantees for riskier mortgage loans.

It was these guarantees, called credit default swaps, that is bringing havoc to our financial markets.

I had promised my friend a post to answer his question more fully, and I may still write further on the topic.

This video from 60 minutes, posted by Jan Wood goes very far to address the question.

Richard

Via Jan Wood, Realtor (R) - Nashville TN Real Estate:

 

This is on credit default swaps.  A Physicist came up with the idea... no wonder we are seeing the banks blow up one after another.  Now you know why the banks didn't go in and work with the people on their foreclosures.  The foreclosures have never been their real problem.  They had to hoard their cash because trouble was on the horizon.  Now, the truth is finally making it to T.V.  Credit Default Swaps-- Insurance Contracts which were not regulated, are the problem.  I have written about this problem over and over and it is just now making it to the screen.  The Wall Street Journal did an article on them as early as 2005.    Click Here for Wall Street Article - Dated 2005

 

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 40161 GA# 28928　

Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC).
Lending in Chattanooga, Tennessee and Georgia for over 20 years.

Stearns Lending, Inc

Cell phone: 423-280-0345 Email: RSmith@Stearns.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc. 
 

5 Comments on 60 Minutes Tonight... A Video In Case You Missed It

OCT
05
2008
1,091,427 Points 201 Featured Posts Outside Blog Hit Router Attended Rain Camp Called Shot Master

Hi Richard. This is a really interesting subject and there will lots of consumer and real estate professionals that will find this information very helpful.
10:23pm • #1
OCT
06
2008
143,957 Points 1 Featured Post Outside Blog Hit Router

Richard ~ thanks for the information and video here. Much clearer now!
6:29am • #2
190,890 Points 7 Featured Posts Outside Blog

Richard,

Thanks for the post. Very helpful information. We had an investment banker, who is a member of our church discuss this very issue during service yesterday.
6:45am • #3
377,702 Points 2 Featured Posts Outside Blog Attended Rain Camp

Richard, this is good information.  It helps to make sense of it all.  Thanks for sharing.
7:41am • #4
128,993 Points 3 Featured Posts

Great Video Richard this does help explain a lot thanks for posting.
8:59pm • #5


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Richard Smith FHA VA Rural Development in TN GA

Chattanooga, TN

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Address: 1961 Northpoint Blvd, Suite 110, Chattanooga, TN, 37343

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