As is — the happy ending, the lenders’ ability to deliver, and the effect the ‘agreement’ might have on valuations.

If this even slows down the rate of foreclosures, the valuations of homes will be less negatively affected, not more.

I’m in your camp with the investors who didn’t sign up to have their rates reduced. I wondered about that myself. Again though, this is why I called it a ‘feel good’ movie — nothing is as it seems. It’s all an escape without an exit door.

Every now and then, pretty rarely actually, I write stuff like this with tongue firmly implanted in cheek — I thought calling it a movie would tip you serious guys off.

Boy, did I think wrong.

I agree with a lot of what Sean said. Two quick points…

One there are a lot more write downs that need to occur before things get close to proper value.

An even bigger point is that I am not sure that Banks will be able to get away with this plan on loans that have been sold to Investment banks, which is the vast majority of them.

Consider an investor who buys a product like this. He is more than willing to accept credit risk, but no way is he signing up for the bank drasitically cutting his rates. This would be false advertisement at the least and a move that would / should bring law suits from investment bank and large investors.

Additionally, what do you think this will do to valuations currently? It will crush them leaving banks even more write downs. Hopefully, i am way off base here, but this goes way beyond a feel good movie. If anything it will be more like the movie Perfect Storm, with a much sadder ending for all. I give the move one star if they donr get sued, and minus a star if they do.

>It’s not clear to me how much this will really help more than a PR effort.

I agree — it sounds good to the public at large.

>Please don’t take this as an attack but claiming that mortgage backed security losses have for the most part already been written off, or even contained, is just plain miss-information.

Certainly it’s not contained, and when I say ‘for the most part’ I should have been much more concise. I should have said, much more has been written off than the public is aware of.

Sugar coat? We can agree to disagree on the future. Sugar coating implies rose colored glasses for which I have none. I offer as an example my consistent warning to investors to stay away from places like San Diego — my home town for Heaven’s sake.

I know you’re not claiming to be a Bull or Bear. I become one or the other depending upon the facts.

It’s my interpretation of our status quo as not being as disastrous as many have predicted. That’s not sugar coating. What NAR does is sugar coating, which, I think you’ll agree, is an understatement. Disaster has been prophesied now for over two years.

Lenders will do what it takes not to execute massive foreclosures. If they don’t? It’ll be a first.

The demise of Countrywide? Yawn — I’m with you on that.

Please don’t take this as an attack but claiming that mortgage backed security losses have for the most part already been written off, or even contained, is just plain miss-information. Banks themselves are not even making that bold of an assertion. The uncertainty as to the true extent of this problem is reflected daily in the downward trend of the financials stocks. More telling of the ongoing deteriorating conditions for mortgages backed securities has been evident in the relatively opaque market for credit derivatives. The benchmark for these loans is an index known as ABX which by any measure has been taking a pounding. There are some excellent web sites covering this wich can be found by searching under ABX.

As a real estate investor I would like to see a recovery but let’s not sugar coat the problems occurring now as it benefits no one in the long run. I’m not a bull or a bear, bubblehead or a cheerleader, just a realist. I read the financial statements of these firms and try to come to an unemotional conclusion.

That said what fun is a blog without some predictions right? Here is mine. Countrywide will disappear in 2008, either broken up or via bankruptcy. Can’t happen it’s said because that would spin a bad perception for the state of the US economy. Agreed, but their balance sheet is simply too ugly and while spin works wonders with politicians it’s not so popular with auditor’s working under Sarbanes-Oxley. The recent BA cash infusion of 2B is currently worth about 1B. It’s hard to believe BA didn’t see that coming. If you look at the short ratio over that period it seems BA’s vote of confidence managed to scare off exactly no one, including myself, from hedging on the short side. I wonder if BA’s plan was a breakup all along. Either way the outcome should be revealed sooner than later.

Would the demise of Countrywide prove significantly more distressing for real estate? No I think, as you say lenders will still lend. Investors will invest.