Secondary Market

OK, let's focus for a minute on the period Jan 01,2008 until March 31,2008. During that period, we all have been reading that Fannie & Freddie have continued to purchase 'conforming' production, just like in previous years (although quality standards are being properly tightened here and there), but as a secondary market for lenders for 'conforming', they're still there.

Now so I can be clear, if it isn't 'conforming' then it's 'non-conforming' do we all agree on that? Non-conforming over the years, has been labled B/C, Atl-A, subprime, and now (the latest cutsie phrase), non-prime. And, further the industry and the general press have been telling everybody who can read, things are being screwed down tight in this sector (long overdue I know you agree), and that the secondary market for this sector of production (non-conforming) is completely gone.

This week, I finished up our May 1st edition of The Mortgageland Journal, so I got a bit behind on my reading. But this morning, I did finish my April 14, 2008 edition of the National Mortgage News dead-tree paper weekly newspaper (which some of you know I have been reading weekly for 30+ years - it's been my favorite). Guess what chart's on page 16, bottom left?

The chart is titled U.S. Asset-Backed Securities and it lists the top 14 issuers ... folks like, Countrywide, UBS, Bear Stearns, HSBC, Washington Mutual, ABN AMBRO, General Mortors, etc. These folks securitized (in US $ Millons) $323,338.1 ! That's well over a Quarter of a Trillion Dollars in 'non-conforming' production!

So ... it ain't dead ... don't let the hyped-up press fool you! It's a mess, yes, but not dead.