Southern California Real Estate Bubble Crash Blog

“It took me a while to believe my eyes, so I’ll sum it up as this:

Insured jumbo debt is loaned at 5.875%.
Banks are demanding 8.0% for the same money.

Without a rescue of FNM and FRE, the housing market would have effectively shut down… and that was before the AIG action today.

I have never in my life seen a spread between jumbo loan money this high (over 2%). Considering the current crash and asset deflation, there is no way that I can call rising interest rates; I just don’t see it, and perhaps my blinders are on, but I can’t see bank credit going any further out of whack than it is right now.

In light of all of the Sunday action, I have dedicated this song to the post:”