"Agency" mortgages are as available as ever, about 6.75 percent, finally showing signs of decline toward ultra-safe Treasurys. High-quality jumbos are available but pricey, about a half-percent above agency, low-doc underwriting scarce. Piggyback seconds and PMI are available for low-down borrowers, but full-doc only. Appraisal underwriting is ferocious, arbitrary and late in the process. The Fed's action this morning has firewalled the mortgage panic from the rest of the banking system, and brought a short-covering rally to the stock market, but will do nothing whatsoever to solve the underlying problems. Something on the order of $4 trillion in nominal mortgages outstanding (give or take a trillion) are not worth that much anymore; perhaps half have lost value in the range of 5-10 percent, the other half ... nobody knows what they are worth. This wild swing at an estimate of troubled loans outstanding is based on $11 trillion in total residential mortgages. One trillion...
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