Re: real estate loan question

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

There are 2 sides to the risk.  Yes, the home owner is vulnerable if he/she cannot
meet the payments, but I was wondering who was holding the bag if the value of the
house is less than the outstanding loan.  Is it the banker or do they package the
loans for other investors?


On Fri, Aug 26, 2005 at 10:57:04PM -0400, Louis Proyect wrote:
> >Who bears the risk on the new-fangled real estate loans?  Are they
> >securitized like
> >traditional loans?
> >--
> >Michael Perelman
>
> No, that's the whole problem. Think of them in terms of buying stock on
> margin, which everybody was into before the 1929 crash.

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu