Secondary Mortgage Market Brings Down Aegis
The subprime mortgage market, and the secondary mortgage market, are bringing down financial companies left and right. One of the more recent companies to succumb to the problems afflicting the mortgage market is Aegis. Reuters reports on where Aegis is going:
“Extreme changes in market conditions, coupled with the rapid decline in the secondary mortgage market severely impacted (Aegis’) operations,” Chief Financial Officer Edward Robertson said in a court filing.
He said Aegis suffered “extraordinary increases” in defaults among borrowers who had just obtained loans, “substantial” margin calls from its own lenders, and growing demands that it buy back soured loans it had sold.
Ultimately, while this is negatively impacting subprime borrowers now, in the long run this subprime lending crash could provide a variety of opportunities. And right now, those getting more traditional mortgages aren’t impacted too much. More documentation is going to be needed, and credit requirements are up in general, but if you are looking at traditional mortgages, like 30 and 20 year fixed, without any “creative financing,” then you are most likely to be able to get what you are looking for (with a little “tightened security,” one might say).
No, the real losses are found in the secondary mortgage market, where investors have been putting their money into subprime mortgage lending and hedge funds have been relying on the continued subprime party to give them great returns. Now, of course, all of that is changing as the lending practices of the past few years have caught up with the market.
But there is still a way for you to benefit. While the secondary mortgage market may not be the best way to go, it is still possible to find some stocks that have been dragged down by the general slide, but are likely to recover. If you are a ways from needing your investments for retirement purposes, you might find that a little dollar-cost averaging in some carefully chosen stocks may result in decent returns down the road.
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