Stopping the Subprime Crisis
The attached article tells us what is happening on the margin. The large institutional buyers are declining to buy the CDO’s that they used to buy because they cannot trust the ratings being given by the rating agencies. This will impact mortgage pricing meaning that the mortgage rates for “A” paper loans (as well as Alt-A and subprime) are rising and risk premiums are increasing significantly. Further, many of the loans at the margin are simply going away (100% stated, no ratio, no income-no asset loans). If you want to look a little deeper at what’s happening, follow the link.
