Earlier this month, CNBC featured a segment on how sub-prime mortgages work.  The shame of it, though, is that it aired at a time when the probable audience was already well-versed on the topic.

This would be like holding a seminar on how to throw a baseball to the attendees of the Baseball Hall of Fame induction ceremonies this weekend.  Chances are pretty good they already know how.

The folks that really needed to see this clip are the average homeowners of America. 

In 4-minutes-and-18-seconds, CNBC very clearly explains how losses in the sub-prime market are beginning to trickle up to into "prime" market.  And this aired before some major, major fireworks.

Since the original air date, the following "bad things" have happened:

• United Capital Asset Management incurs $500 million in sub-prime losses (July 3)
• Braddock Financial incurs $100 million in sub-prime losses (July 5)
• Bear Stearns funds incur $1.5 billion in sub-prime losses (July 18)
• Basis Capital Funds Management incurs "steep" sub-prime losses (July 20)

Big numbers, folks, and they are creating a larger fear about United States mortgage-backed debt on the whole.  Previously contained, the fear is now creeping out of sub-prime and into the 'tweener Alt-A market. 

If sub-prime and Alt-A loans keep throwing off losses of this magnitude, investors around the world will eventually stop buying the "Triple AAA"-rated stuff described in the video, too.  If that happens, whoa Nellie!

Watch the clip.  It's only four minutes long.

Source
How Credit-Market Tremors Have Affected Junk Bonds, LBOs and Hedge Funds
The Wall Street Journal Online
http://online.wsj.com/public/resources/documents/info-BondTurmoil0707-sort.html

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.