Banks can hold both, but commercial defaults do not flow through to residential mortgage-backed securities. Some banks carry commercial and residential real estate on the same balance sheet, so at the institution level the exposures can sit side by side. The securities are a different matter. Each mortgage-backed security is valued on the strength of its own underlying collateral, so a wave of office and commercial defaults leaves residential MBS backed by performing home loans intact. Recent bank trouble mostly came from elsewhere anyway. In the regional-bank failures, the problem was being forced to sell MBS holdings at a loss to meet withdrawals, a liquidity-and-rate problem that adds supply and pressures pricing. Credit losses on commercial loans were a separate, slower story. We read the risk somewhat differently between us, and that is fine. Jeb would not be surprised to see more bank stress and further failures, given how much liquidity has been pumped in to keep the system steady, even as regulators report no broad credit tightening. Josh is more sanguine. For a homebuyer, the practical takeaway holds either way: residential mortgage pricing runs on residential collateral and the bond market, and commercial real estate headlines are their own story.