As investors react to the subprime news, gurus are double-checking their portfolios and telling shareholders what they think and where they are. This the commentary Dodge & Cox just released:
Recent market volatility caused by disruptions in the subprime mortgage market has sparked interest in this segment of the market and its impact on the Dodge & Cox Funds. The Dodge & Cox Funds do not have any direct exposure to subprime mortgage backed securities. Based on publicly available information, we believe the Funds’ indirect exposure to subprime mortgages is modest.
By way of background, the subprime mortgage lending market is characterized as mortgage lending to individuals with weak credit histories and/or limited financial resources. The recent period of high home price appreciation contributed to looser underwriting standards among subprime mortgage originators; now that the surge in home prices has abated, the delinquency experience of subprime loans has risen significantly. Even though the subprime mortgage market represents approximately 15% of the $10 trillion residential mortgage market in the United States, the effect of the troubles in the subprime area on the financial markets as a whole has been pronounced.
Read the complete commentary
Recent market volatility caused by disruptions in the subprime mortgage market has sparked interest in this segment of the market and its impact on the Dodge & Cox Funds. The Dodge & Cox Funds do not have any direct exposure to subprime mortgage backed securities. Based on publicly available information, we believe the Funds’ indirect exposure to subprime mortgages is modest.
By way of background, the subprime mortgage lending market is characterized as mortgage lending to individuals with weak credit histories and/or limited financial resources. The recent period of high home price appreciation contributed to looser underwriting standards among subprime mortgage originators; now that the surge in home prices has abated, the delinquency experience of subprime loans has risen significantly. Even though the subprime mortgage market represents approximately 15% of the $10 trillion residential mortgage market in the United States, the effect of the troubles in the subprime area on the financial markets as a whole has been pronounced.
Read the complete commentary
