Markets

Nov 25: CHRIS FLANAGAN talks about toxic mortgage assets

November 25 2008: Chris Flanagan, managing director at JP Morgan and head of the bank's asset-backed research, says it is accurate to classify all mortgage-backed securities as distressed or toxic assets. Loss expectations on many securities are now far exceeding original loss expectations, often by multiples of four, five, six, seven times the original amount. Prices on triple A securities have moved down to 30, 40 or 50 cents on the dollar. They are under enormous price pressure due to the substantial rise in losses on the underlying mortgages. There are many questions around modification of mortgages, which is being done so that people may be better able to make payments and avoid foreclosure. The impact on owners of different securities is not clear.