{"id":199257,"date":"2007-08-20T21:37:00","date_gmt":"2007-08-21T02:37:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2007\/08\/20\/subprime-mortgage-crisis-spreads-to-high-end-homes-aug-20-2007\/"},"modified":"2007-08-20T21:37:00","modified_gmt":"2007-08-21T02:37:00","slug":"subprime-mortgage-crisis-spreads-to-high-end-homes-aug-20-2007","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2007\/08\/20\/subprime-mortgage-crisis-spreads-to-high-end-homes-aug-20-2007\/","title":{"rendered":"Subprime mortgage crisis spreads to high-end homes – Aug. 20, 2007"},"content":{"rendered":"

CNN has a story on how the Subprime*<\/sup> meltdown is Subprime hitting high-end homes<\/a>.<\/p>\n

I think that the story is fairly “cry me a river”, for rich people, but there is an interesting graphic.\"\"<\/a><\/p>\n

<\/div>\n

The idea here is that Fannie Mae and Freddy Mac cannot fund home loans over $417K, so these so-called “Jumbo” loans carry a larger interest rate.<\/p>\n

While Fannie Mae and Freddy Mac are the largest mortgage resellers, it’s not their size, or their ability to negotiate a good deal that gets the lower rate (at least not most of it).<\/p>\n

It’s that both of them are GSE (G<\/span>overnment S<\/span>ponsored E<\/span>ntities), chartered by the federal government.<\/p>\n

What this means is that while they are private corporations, and owned by shareholders, and both have publicly traded shares, there is the implication<\/span>, and only the implication, that in the event that they were to become insolvent, then the government would bail them out.<\/p>\n

Most of the difference in rates between conforming and jumbo loans is simply this fact, and all<\/span> of the change relative to one another in the past few months is due to this implicit government guarantee of payment.<\/p>\n

This gap has gone from about 0.2% to about 0.7% because people have little confidence in private financial markets, and this appears to be continuing and accellerating.<\/p>\n

*<\/sup>As I’ve said before, it’s not just Subprime<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

CNN has a story on how the Subprime* meltdown is Subprime hitting high-end homes. I think that the story is fairly “cry me a river”, for rich people, but there is an interesting graphic. The idea here is that Fannie Mae and Freddy Mac cannot fund home loans over $417K, so these so-called “Jumbo” loans …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1261,973],"tags":[],"class_list":["post-199257","post","type-post","status-publish","format-standard","hentry","category-bubble","category-economy"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/199257"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=199257"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/199257\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=199257"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=199257"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=199257"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}