For those of you following the markets and interest rates, of especial importance is the place in the mortgage market of B paper lenders. These are the loans that have been actually most favored in the last few years by investment bond traders and the securitizers of Mortgage Backed Securities.
The wave of bad news for these lenders has reached tidal proportions and sweeping tightening of credit is evident throughout the marketplace at this time. Wholesale investors are shutting down, such as Wells Fargo sub-prime correspondent lending and wholesale mortgage lenders, the banks and financial companies that support Mortgage Brokers and institutions who are “table funding” (the definition is in the first 2 paragraphs, read on for insane 15 page detail), loans are dropping sub-prime programs with many of the major players in the field facing rising costs to borrow short term credit with which to make loans or even forced “purchase options” to sell themselves in exchange for short term credit!!
