Re: real estate loan question

[Eugene Coyle <eugenecoyle@xxxxxxx>]

I've read recently that on some packages of loans packaged for other investors, the originator of the loan is still on the hook and could be forced to take them back.  I.e. there is recourse.  I was surprised to read that and have no sense of the portion of total packaged loans this amounts to.  But if true, some of the originators are operating in reckless territory.

Gene Coyle

Michael Perelman wrote:

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