Ruh-roh: Right on schedule, the Alt-A "Liar's Loan" CDOs start tumbling. The big problem? $1 Trillion of Alt-A, vs. only $650 billion of subprime

Man, if the financial world just read the bubble blogs, they wouldn't have all these little "surprises"

Gee, what a shock! The liar's loans ain't gettin' paid back! Who knew! Oh my!

Unreal.

They called them "Liar's Loans" for a reason. One more time - they called them "Liar's Loans" for a reason.

Not only will Liar's Loan King IndyMac go out of business eventually, after getting sued to the moon by the bagholders who bought their garbage, but I hope to see their mortgage-fraud-enabling stock-pumping CEO Michael Perry frog-marched at the FBI's earliest convenience.

Alt-A Mortgage Securities Tumble, Signaling Losses

Securities backed by Alt-A mortgages and other home loans to borrowers with better-than-subprime credit tumbled this month, causing investment funds to unwind or meet margin calls and signaling larger losses for Wall Street.

About $950 billion of Alt-A mortgage securities are outstanding, compared with about $650 billion of subprime securities and $500 billion of prime-jumbo securities

FLASH: It all falls apart - Alt-A "Liar's Loan" lender American Home Mortgage one step closer to bankruptcy, pulls dividend at 10:19pm Friday night

Man, it's dot-com all over again. Now it's just dot-lenders. One by one these Alt-A "Liars Loan" and Subprime sweat shops are going tits up.

This one's a shocker though. The dividend was already awarded, declared on June 15 for all stockholders of record as of July 9. And then in the late into the night on Friday, they put out this release and say oops, our bad, all of you expecting your dividend are screwed. I bet it was the auditors who finally made them come to Jesus - note they admitted but didn't document that the credit meltdown "has caused major write-downs of its loan and security portfolios"

MARKET TO MARKET. MARKET TO MARKET. MARK TO MARKET.

The market will react furiously to this on Monday. Watch for AHM to trade to near $0, get delisted, see shareholder lawsuits, announce their layoffs, and then the march to bankruptcy.

Wow. Friday night. 10:19pm. Wow. Thanks Richard for the tip.

IndyMac - you're next (yes, I'm short IMB). Your Mark to Market is going to be a shocker.

American Home Mortgage Investment Corp. Delays Payment of Quarterly Common Stock and Series A and Series B Preferred Stock Dividends

American Home Mortgage Investment Corp. (NYSE: AHM - News) announced today that its Board of Directors has decided to delay payment of its quarterly cash dividend on the Company's common stock and anticipates delaying payment of its quarterly cash dividends on its Series A Cumulative Redeemable Preferred Stock and Series B Cumulative Redeemable Preferred Stock in order to preserve liquidity until it obtains a better understanding of the impact that current market conditions in the mortgage industry and the broader credit market will have on the Company's balance sheet and overall liquidity.

The disruption in the credit markets in the past few weeks has been unprecedented in the Company's experience and has caused major write-downs of its loan and security portfolios and consequently has caused significant margin calls with respect to its credit facilities.

The quarterly cash dividend of $0.70 per share on the Company's common stock had been declared on June 15, 2007 and was to be paid on July 27, 2007 to all shareholders of record as of July 9, 2007. The Series A Preferred Stock dividend and Series B Preferred Stock dividend had been declared on June 15, 2007 and are payable on July 31, 2007, to shareholders of record as of July 9, 2007.

CNBC educational video on subprime loan CDOs and derivatives - a must-watch for HP'ers

So if you're a hedge fund, how can you lose everything investing in subprime mortgages?

Now you know.

And then the dominos started to fall, one by one...

PIMCO's Gross: Subprime crisis not 'isolated'

NEW YORK (Reuters) -- Bill Gross, manager of the world's largest bond fund, said Tuesday the subprime mortgage crisis gripping U.S. financial markets was not an isolated event and will eventually take a toll on the economy.

Gross said there are hundreds of billions of dollars of subprime residential mortgage-backed securities (RMBS), derivatives on subprime RMBS and collateralized debt obligations (CDOs) that buy subprime RMBS and/or the derivatives on the RMBS - all of which he considers "toxic waste."

Gross, who manages the $104 billion PIMCO Total Return Fund, said the subprime crisis "may be just what the Fed has been looking for - easy credit becoming less easy; excessive liquidity returning to more rational levels," he added.

According to Gross, the subprime crisis will unfold in these resets. The ultimate impact they will have will be on the impaired prices of homes - "the collateral that's so critical in this asset-backed, and therefore interest-rate-sensitive, finance-based economy of 2007 and beyond."

Victims?

The mainstream media and our blow-hard congressmen are portraying people losing their homes to foreclosure as "victims" of "predatory lenders".

I'm sorry, who was it that signed the paperwork?

Should we consider any consenting adult who freely enters into a contractual agreement a "victim" if things don't turn out how they planned?