Federal Home Mortgage Loan (OTC:FMCC) is about to release earnings. Ponder this Bear Case Scenario:
America is not out of the woods yet. Housing may have stabilized for now but until solid employment comes back Americans and the communities they live in are not financially strong. Real Estate is very localized. Close a factory or two and suddenly mortgage defaults soar.
Many mortgages are underwritten at historically low rates. Employment income is unstable. How many homeowners can survive a rate increase of three or four percent. Very few. Blood will flow down the streets as Americans hemorrhage in the bank account.
Why would you want to insure against this near certain adverse risk.
George Gutowski writes from a caveat emptor perspective.