The mortgage and foreclosure issues are not static. Someone will benefit from the turmoil in the market. Perhaps apartment REITs will benefit, as well.
Remember that there are loss reserves that are built into any securitization. They are rated AAA for seniority on the pool's cash flow. The lower rated tranches are rated that way due to their lower priority.
The same credit crunch occurred in 2001 and in 1998 in the MBS market. There are cycles in any market and the MBS market is no different.
The key factor is how much mortgage rates increase? They have increased from about 5.8% to 6.19%, which is meaningless. Check out
www.bankrate.com for the rates.