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A Mortgage Game with No Rules

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AP

I came to Orlando expecting balmy weather and fierce debate on the future of the mortgage securitization market.

I got neither.

It was barely fifty degrees when I got to the American Securitization Forum's conference this morning, and while I overheard plenty of conversations over coffee about distressed loans, the business going on here is all in other securitizations.

"I think the takeaway is you need to start building your platform, but building a platform really for 2012, not for 2011," notes ASF Executive Director Tom Deutsch. "But there are a lot of other areas within the securitization marketplace where these people are very active, particularly on the auto side, the credit card side, the student loan side, where those areas are seeing extraordinary vibrancy."

In the meantime, several speakers at the forum said several scary things about housing and foreclosures. Mark Zandi of Moody's Economy.com is looking for a hybrid version of Fannie and Freddie, or a mortgage market more privatized but with government backing. He said that if the mortgage market were fully privatized, mortgage rates would go up at least one percentage point and home prices would drop ten percent.

Laurie Goodman of Amherst Mortgage Securities put up some truly scary charts about non-performing loans and, with a flurry of numbers I couldn't follow, said that without government intervention about 11 million more borrowers could lose their homes.

"Equity is the single most important determinant of default, not unemployment," declared Goodman. This as a new report from CoreLogic this morning showed home prices dipping over 5 percent nationally in December, year-over-year.

"The key thing for investors to look at right now is what's going to open up for them, what part of the playing field is going to open up where they can actually step in and be part of the mortgage market again," said Armando Falcon, chairman and CEO of Falcon Capital Advisors, on a bit of a brighter note. "And that's clearly going to be for the jumbo prime mortgage sector."

I also did a live interview with former FHFA director James Lockhart, who is now on the other side, investing money for WL Ross. Check it out. He wants Fannie and Freddie out of the mortgage market, and believe it or not, he's betting on the mid-sized regional banks.

Questions? Comments? RealtyCheck@cnbc.comAnd follow me on Twitter @Diana_Olick