NYT: Lenders Act to Attempt stabilization of mortgage backed securities

It was a busy weekend last weekend...with the video cameras...the tape recorders....and all the cheering and scoring.....and yes there even was some of that locally on our football fields.

I am speaking of the meetings that were held round the clock in Washington and New York via teleconference to put together a plan to support and stabalize the packaged products of mortgage securities that were in danger of plunging in value.

These securities were important to the banks----and they were also important to every mortgage application maker in America. Banks mostly do not hold mortgages for full term any more. Yes. Some banks in Evansville do hold their mortgages. BRAVO. However, most banks sell these mortgages and they are packaged and there are investment vehicles created to finance them. The problem is that investors did not want to buy these due to the current crisis and the difficulty of really pricing them properly, or determining what they are worth at any point in time. The meetings through the weekend only addressed the best, AA and AAA quality mortgages, but was important, since high quality mortgage applicants were having difficulty getting approved because of the market conditions.

Click on the post for the full story in the New York Times. This is part A of the story. Part B will be the attempt to address the sub-prime component. Treasury Security Paulson refers to the fact that about 50% of the folks who are facing foreclosure have not even been contacted by their lender. So much for dialogue. Stay tuned.