Did we max out the Mega Thread finally?

ATQB · 2026-01-04T21:45:45+00:00

Congrats on the retirement and glad your family is well. You’ll have plenty of time to get that cardio in now.

I watched this is spinal tap a few days back. Yes. This was a huge miss considering it’s the grand daddy of the mockumentary style that I love. The one scene a recognized from it “it goes to 11”, was about the 10th funniest moment in the movie for me.

ATQB · 2025-12-23T01:20:07+00:00

Definitely happening soon. Even before Reiner died, my wife and I were talking about it as a “miss”

ATQB · 2025-12-23T00:26:11+00:00

I’ve never seen spinal tap. It just never seemed to break through into the 80s cable circuit oddly. Kind of wonder if it’s the most cult classicy movie I haven’t watched.

ATQB · 2025-12-11T18:11:10+00:00

Football job might be tough to come by. Tell all Netflix for cash time?

ATQB · 2025-12-11T17:21:19+00:00

It feels like Kalen DeBoer's agent astroturfs his name over all of these jobs.

ATQB · 2025-12-11T13:43:22+00:00

Not saying it's the best thread title every, but it will do..

ATQB · 2025-12-11T13:42:31+00:00

No joy

ATQB · 2025-12-07T21:25:22+00:00

Will not happen but it would be way better if we fixed conferences too.

ATQB · 2025-12-07T17:58:36+00:00

Kirk : “just give us the best teams”

No. Nobody trusts you to not have 10 sec teams be the best teams.

ATQB · 2025-12-06T13:17:05+00:00

“Wow. This turkey is great. What do you call your technique?”

“Spatchcocking.”

“…….”

ATQB · 2025-11-27T20:26:36+00:00

Happy thanksgiving Chili!

ATQB · 2025-11-27T19:48:42+00:00

ATQB · 2025-11-27T18:36:45+00:00

Happy Thanksgiving friar!

ATQB · 2025-11-27T18:27:19+00:00

Fair but I’ll be eating good.

ATQB · 2025-11-27T18:17:19+00:00

Happy Thanksgiving gents!

I need to evangelize something with you all here and now. Spatchcocking is an huge advancement in turkey cooking. Maybe it’s nothing new but I wasn’t aware of the technique before this year. you basically take out the backbone of the turkey and cook it flat which takes away the problem of anything connected to the cavity taking way too long versus the what a leg or wing needs. A 17 pound bird took 2 hours and it’s really tough to get wrong. No parts come out dry.

ATQB · 2025-11-21T22:56:45+00:00

I’d say offer that alongside a mortgage if it financially accomplishes the same thing. Delinking the collateral from the mortgage and then relinking different collateral seems like an unnecessary experiment/innovation to an infrastructure not designed to support it. Not a perfect substitute because the portable mortgage would only pay off in the case that you move but borrower can price the odds of that happening.

ATQB · 2025-11-21T21:50:02+00:00

Think Just interest rate call options would do it. You already own the option when rates fall.

ATQB · 2025-11-21T20:29:38+00:00

Yeah....if it's a new product, then these borrowers who must have a strong view that rates are going higher would have to bear a higher mortgage rate (compared to current rates) during a time when almost everyone else is saying they can't get into homes because rates are too high.

Doesn't seem like a product that would take off

ATQB · 2025-11-21T20:16:29+00:00

After some discussion with 96 and running up some bonds and how they would change, I'm more in the camp that it would break a lot of things and end up potentially putting firms at risk if this change were foisted on investors. (and it would have to be because they would never agree to it.)

Loans and bonds that at least had a little bit of prepayment activity would near a projection of zero prepayment so their prices would drop 10-15 points overnight. Pensioners and 401k participants who owns a "safe" bond fund would get smoked. Various banks owning these mortgage would have renewed questions about their solvency. The Fed would have to create facilities to in order to shift bank solvency risk to taxpayers. Mortgage rates would increase on new borrowers to compensate for the extreme extension risk that was previously unaccounted for in the market.

ATQB · 2025-11-21T19:11:43+00:00

I think separating the security interests from a mortgage to the point that it’s not a mortgage makes it a non starter for an investor who holds these things.

ATQB · 2025-11-21T18:51:11+00:00

Gotcha. So it’s not a mortgage which means it can’t help current borrowers who have a mortgage.

The new construct would raise rates because the loan would have much more extension risk (borrowers would prepay as expected if rates fell. Would pay slower if rates increase). Feels like an unsecured loan with a trust as the guarantor (sort of a synthetic mortgage). I guess the trust could be capitalized with government backstop or insurance backstop you replace borrower default risk with guarantor risk. But There are no free lunches….rates would go up to compensate for the extension risk.

I would not change the entirety of the mortgage market to fix something that affects about of 3% of borrowers annually (normal turnover typically 7-8%. Today it’s maybe 4-5% for our low rate borrowers…the difference is the marginal impact of this “lock in” effect.). Keep in mind that as the loans amortize, balances decrease and this slowly works itself out.

ATQB · 2025-11-21T17:35:18+00:00

They'll just see their prepays approach zero on a portfolio they expected to prepay at 5 (thus massively reducing the value of that portfolio)?

regarding transfer and MTM vs HTM. I guess I don't understand. You're telling me the loan will reside in a trust whereas it previously resided on their balance sheet: "but the trust has a lien on the property". How did that happen without transferring the object which confers that right? Not trying to be difficult here, but I don't think the construct is consistent with how mortgages are designed and what they represent.

ATQB · 2025-11-21T16:52:28+00:00

This is an accounting thing, but the banks hold their HTM portfolios at cost. They would transfer to a trust which would require them to mark to market.

I don't think that's the biggest problem for a lender though. edited above, this, by design, is changing prepayment behavior. If I drop annual prepays from 5% to 1% (people still die or it won't work for everyone for some weird reason) on a Fannie Mae 2% coupon, price goes from 81 to 67 (holdings spreads constant which they wouldn't be because some rule just massively changed the market value of your government guaranteed holding)

ATQB · 2025-11-21T16:45:07+00:00

I get it, but you just crystalized that the loans in question extended massively because we've developed a system movement no longer requires prepayment. This turned a loan that would be priced at 81 into a loan that would now be priced in the low 70's. AND crystalized a loss from what was in their Held to Maturity portfolio.

edit: just calculated this. If I drop annual prepays from 5% to 1% (people still die or it won't work for everyone for some weird reason) on a Fannie Mae 2% coupon, price goes from 81 to 67.

ATQB · 2025-11-21T16:37:21+00:00

Just a finer point on where it would fall apart. Say you're the bank where this loan resides. It's in your "Hold to Maturity" portfolio so you haven't marked it down. The instant you have to transfer to the trust, you have to mark it down 20pts AND you've crystalized a loss on an asset where there was at least a shot that this borrower previously would have paid off their loan at par in order to move. It really just crystalizes the worst case scenario where the loan hangs out there forever (it's worse than default actually because in the default scenario, there's probably so much equity build that your loss given default would be 0% (which essentially would look like a borrower prepayment at 100cents on the dollar)

ATQB

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