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Conventional mortgages didn't change in 2007 either. Now I don't think we're about to see the black swan again. But its always the riskier-end of the market th
by dragontamer 4y ago
Conventional mortgages didn't change in 2007 either.
Now I don't think we're about to see the black swan again. But its always the riskier-end of the market that reacts first. I think its important to keep an eye on the subprime / risky mortgages to get a feel on the market.
The current question is "demand destruction", from a combination of inflation and rising interest rates. If the real economy out there is truly getting worse, then these little issues will become more and more common.
- __derek__ 4y agoThese lenders are not going broke because the mortgages are bad. They're going broke because they relied on short-term credit lines to originate mortgages, and rates have moved hard against them. Now they don't have the ability to rectify the situation without realizing a big loss on the mortgages.
- winternett 4y agoThe same consequences that a homeowner who over-buys has to face... I can't feel much sympathy for it.
- skrtskrt 4y agoConventional mortgages didn't change but the assets associated with them did take huge valuation hit when the bubble popped, which still matters for those packaging up loans, if the assets they have a claim to have dropped 40%.