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Fri Mar 21st 21:57 PM | Rating: 0 0
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CapitalSource Can't Cover Its Dividend

I know this is not news, just facts re 2005. So what effect can losses from defaults have one the firm's cash flow in 2008 on assuming borrowers are stressed on loan re-pricing? Now that interest rate levels have been somewhat reduced, it may be less of a concern? This fact saet beow is what I see as factual that concerns investors in CSE, otherwise it appears to be the broad brush affecting them...?

CSE:
"As part of its efforts to qualify as a REIT, the company purchased $2.3 billion in residential mortgage-backed securities during
the fourth quarter 2005. It also purchased an additional
$1.1 billion in residential mortgage-backed securities and
purchased apx. $2.5 billion in residential prime whole
loans. As of Dec. 31, 2005, all the residential mortgage
investments were in hybrid adjustable-rate mortgage
securities with underlying mortgage loans that were
originated as 3/1, 5/1 and 7/1 hybrid ARM loans."
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