David Crisp (aka Casey Serin South) update

His & hers houses sold at auction. What a jerk. The $700,000 house was his; hers was a $324,000 dump.

How did the banks do? $200,000 loss on the first house (plus auction fees and other expenses), almost $300,000 loss on the second. For good measure, Davey's mom just had a house auctioned for another $300,000 bank loss.

30%-40%, and larger, bank losses are going to become commonplace. Loans were made on inflated appraisals, and real estate values are plummeting in many areas.

This is why I am so comfortable being short Countrywide. Their real estate owned portfolio is now $2.5 billion, up 18% in one month. And we are still very, very early in the foreclosure cycle. Countrywide will eventually have to dump all that property for considerably less than the current asking price. Best case: enough horrible loans default to put Countrywide in bankruptcy. Worst case: Countrywide survives this but continues under a much less attractive business model. No more stupid hedge funds to buy their high-margin product. Return to normal lending standards and Countrywide might be worth $10 - $20 per share.