Mortgage Bond Funds Running Screaming for the Door

This is an attempt to sell at fire sale prices, so they can get out before everyone is heading for the exits.

It is the start of a panic.

Bear Stearns fund scrambles to sell bonds

Hedge fund faces losses as it tries to sell about $4 million in mortgage-backed bonds to raise cash for redemptions, according to a report.
June 14 2007: 8:03 AM EDT

NEW YORK (Reuters) -- A hedge fund managed by Bear Stearns Cos. Inc. is trying to sell large amounts of mortgage-backed bonds in a potentially troubling sign for the broader mortgage-backed bond market, The Wall Street Journal reported in its online edition.

Bear Stearns' (Charts, Fortune 500) High-Grade Structured Credit Strategies Enhanced Leverage Fund is facing losses and, together with a sister fund, is trying to sell about $4 billion in bonds to raise cash for redemptions and to prepare for likely margin calls, according to the report, which cited people close to the fund.