Saturday, September 13, 2008

The Mortgage Based Securities Fire Sale

Today's Wall Street Journal (Saturday September 13 page B8 and B9), under legal notices there is a rather large group of Mortgage Pass Through Certificates up for auction. Here's a snapshot of the first 30 of 132 for September 17th auction. Most of it is 30 and 40 year paper written in 2006. Double click for a bigger view.

September 15, 95 issues valued at 286 million

September 16, 53 issues valued at 118 Million

September 17, 132 issues valued at 526 Million

September 18, 21 issues valued at 70 Million

You can Google a CUSIP Number and get more info. Here is a Link that describes how they put these things together. Notice the date on the link is Oct 24, 2006. The package in the link was about 1.5 Billion. So each of the listings above is a portion of an original package. Investors were waiting in line to buy these. This particular package was made up of 1775 loans with 71 percent originating in California. These are probably loans that are about to reset---talk about bad timing.

I don't know how the auction handles bidding. I would guess that there is a minimum bid set for each security. I don't see many bottom feeders wanting to jump into this auction.

As I have pointed out before, people that need to raise cash, sell the good stuff first hoping the bad stuff improves with age. You get stuck in the end. This is stuff begging to be buried in kitty litter. You'd think that someone would mention which investment firm is in a desperate selling mood. Maybe we ought to ask Senator Schumer.

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