Fraud Starting to Bubble To The Top, S&P Cutting Bonds?

Posted 2007-04-25 10:23
by Karl Denninger

Gee, who'd a-thunk?

"Cheating on mortgage applications is so widespread and so seldom punished that it's fueling an increase in foreclosures that will prolong the housing slump, said Robert W. Russell, counsel to the director of the Office of Thrift Supervision, which oversees savings and loans." (Bloomberg)

Liars loans...... with default rates 10 times that of fully-documented prime loans (that fit within conservative, time-proven, front and back end ratios.)

S&P is (finally) picking up on it too..... and this is not subprime folks, its ALT-A - you know, those "liars loans"? Yeah. Here's what they said today...

"Standard & Poor's said it may lower ratings on bonds from 11 different securitizations of home loans made last year, more than doubling the number of its warnings on bonds of so-called Alt A mortgages. S&P said it's considering the move amid higher-than-anticipated delinquencies. " (Bloomberg)

And people think this will remain "contained"?

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