kdo

U.S. Banks Still Need To Come Clean on Subprime

I haven't heard too much noise on this and have been waiting, because I've known it too, although the legalese makes it unclear to me exactly what will happen:

"The fact that they sold them won’t help as there are clawback provisions for bad debts and that will take ages to work through the system."

When you start to look at some mortgage lenders out there and the size of subprime loans they've sold off with the view that some of that may be stuffed right back up their @$$ (which I'm sure they will try), they start to look ever more like bankruptcy candidates, depending of course on how much recourse there ends up being. Some companies should essentially profit from this shakeout and some will get slammed. Have been trying to sort out which is which.

Anyone familiar with CA lending laws and the rights of borrowers to walk out on the loans? This is instrumental in understanding WAMU, because they're so heavily weighted towards CA. I have a friend who figures he's $100K upside down up in Sonoma. I've just started looking for details, but I believe he could probably walk out on the loan if he chose to and stick the bank with the problem. The laws are different in different states. If it's easy to walk, the banks exposed out here are gonna have a big problem.

Why WaMu Must Confess

I thought Freddie wouldn't buy jumbo, which I'd think most of WAMU loans are. Is this not right, or are they just buying non-jumbo ARMs?