In his first ever television interview, Lew Ranieri, 'the Father of Securitization', told the folks at CNBC his view of the truth about the housing market. It's notable that they cutoff the video while he was mid thought. I wonder what he said after that. Be aware that he is a buyer of distressed debt and thus scaring people about the housing market could backfire badly on him. Then again, none of us know his true financial motivations for what he says about the state of the industry. I must say he sounds credible to me based on everything else I have read from trusted sources.
Here's the interview:
(Lew Ranieri is known as the "father of securitization" because he helped invent the securitized mortgage in 1977 while working for Salomon Brothers. He's even been credited with inventing the word "securitization.")
CNBC
Lewis Ranieri
A brief summary of what he said, is that credit has dried up for new mortgages which (if the status quo continues) will lead to a massive increase in foreclosures (double the current number) and thus a further decline in housing prices thus causing more foreclosures. In addition, the commercial real estate market is having a strange bubble in commercial mortgage-backed securities where high risk securities are getting undeserved great ratings from the agencies and are being purchased like crazy similar to how the residential market was in the years leading up to the crash.
Kinda scary to hear this from someone who actually understands how all these crazy financial securities work.
Thoughts?