United States Treasury Secretary Henry Paulson is extremely optimistic that many of the big players in the mortgage industry are going to go to work for thousands of homeowners.
A deal is in the works to extend the lower introductory rate on fixed rate mortgages for 1 - 7 years. My bet is that when it is all said and done, we'll be looking at 3 years.
This is phenomenal news! If it goes through, it will be the government's greatest achievement in alleviating the mortgage meltdown!
http://hosted.ap.org/dynamic/stories/M/MORTGAGE_CRISIS?SITE=CODER&SECTION=BUSINESS&TEMPLATE=DEFAULT#
Showing posts with label Subprime mortgages. Show all posts
Showing posts with label Subprime mortgages. Show all posts
Nov 28, 2007
Problems...
The real estate industry is going nuts. We all see the news, read the horror stories and witness giants such as CITI and Countrywide scramble while their stock prices tumble and tumble and tumble...
Rust Belt city mayors recently met to discuss the mortgage mess. With all of the media hype, government officials are calling for changes. They are calling for help. The question is... will help arrive?
I hope not. Here is why. The mortgage mess is due to a few factors.
1. Lack of Consumer Education. Borrowers were told two things:
-Your credit will improve. This is true IF you embrace responsible spending.
-Your home will appreciate. Long term, this is always true. Short term, there are no guarantees. This is especially true for borrowers who didn't treat their home as an investment.
2. Greed.
-Wall Street was getting rich. Can you imagine 1% of hundreds of billions of dollars? -Brokers. While Wall Street was getting fatter than fat, individual mortgage brokers seized the opportunity to gouge clients on their loans.
-While 1% of hundreds of billions is hard to imagine, a $10,000 profit on a single closing hits a little closer to home.
3. Government -A president who wants to increase home ownership (Great principle, but the means to this end has proven errant).
-Greenspan. The jury is still out, BUT interest rate cuts made unaffordable homes, very affordable (for the time being).
Looking for solutions? Check out the next post.
Rust Belt city mayors recently met to discuss the mortgage mess. With all of the media hype, government officials are calling for changes. They are calling for help. The question is... will help arrive?
I hope not. Here is why. The mortgage mess is due to a few factors.
1. Lack of Consumer Education. Borrowers were told two things:
-Your credit will improve. This is true IF you embrace responsible spending.
-Your home will appreciate. Long term, this is always true. Short term, there are no guarantees. This is especially true for borrowers who didn't treat their home as an investment.
2. Greed.
-Wall Street was getting rich. Can you imagine 1% of hundreds of billions of dollars? -Brokers. While Wall Street was getting fatter than fat, individual mortgage brokers seized the opportunity to gouge clients on their loans.
-While 1% of hundreds of billions is hard to imagine, a $10,000 profit on a single closing hits a little closer to home.
3. Government -A president who wants to increase home ownership (Great principle, but the means to this end has proven errant).
-Greenspan. The jury is still out, BUT interest rate cuts made unaffordable homes, very affordable (for the time being).
Looking for solutions? Check out the next post.
Solutions....
Heads up... This post doesn't present a warm and fuzzy outlook filled with easy solutions. Most problems aren't solved the easy way.
First of all, let's start with solutions that are flat out wrong.
1 - Wall Street. Just take a peek at Citi & Countrywide stock prices. Tell me how bad any investor wants back in.
2 - Expanded Underwriting.
1. The reason this entire mess exists is a lack of underwriting standards. Essentially, people who do not qualify for loans received them.
Wall Street learned its lesson. It's done.
So should the government jump in and take on all of these bad loans? NO WAY!
I completely agree with the government expanding FHA standards to some extent. For example, people who were never late on their mortgage prior to the rate adjusting deserve to refinance. However, everyone does not deserve to get bailed out!
So what is the answer?
TIME! There is a ton of inventory on the market. There are too many builders. There are too many borrowers who simply can not afford their home. There is a lot of downward pressure on the housing market. We are not in a short term market. It's a buy and hold market.
My advice to you.
Get off of craigslist. Start working with a qualified Realtor. Make them show you some comparable sales. You can get a great deal. Buy the cheapest house in the best neighborhood and reap the rewards!
First of all, let's start with solutions that are flat out wrong.
1 - Wall Street. Just take a peek at Citi & Countrywide stock prices. Tell me how bad any investor wants back in.
2 - Expanded Underwriting.
1. The reason this entire mess exists is a lack of underwriting standards. Essentially, people who do not qualify for loans received them.
Wall Street learned its lesson. It's done.
So should the government jump in and take on all of these bad loans? NO WAY!
I completely agree with the government expanding FHA standards to some extent. For example, people who were never late on their mortgage prior to the rate adjusting deserve to refinance. However, everyone does not deserve to get bailed out!
So what is the answer?
TIME! There is a ton of inventory on the market. There are too many builders. There are too many borrowers who simply can not afford their home. There is a lot of downward pressure on the housing market. We are not in a short term market. It's a buy and hold market.
My advice to you.
Get off of craigslist. Start working with a qualified Realtor. Make them show you some comparable sales. You can get a great deal. Buy the cheapest house in the best neighborhood and reap the rewards!
Aug 9, 2007
Credit Meltdown?
I'm not a Wall Street expert. I'm a mortgage broker! My primary concern on a daily basis is rates! I want to get the best rates possible for my clients. Essentially, I utilize the bond market to try and get my clients the best rate.
I'm not a financial genius, but I have seen the subprime mortgage industry all but disappear over the past 8 months. There has been considerable concern. Sensationalists speak of financial mayhem in the stock market because of these poorly performing loans. Other sensationalists imply that everything is just fine. (I hate to admit it, but these are typically people in the mortgage and real estate industry.)
I think the truth is somewhere in the middle.
Are subprime loans a mess? ABSOLUTELY!
Are subprime mortgages and easy credit going to destroy the world? I highly doubt it. While the mortgage sector is seeing drastic changes which are affecting the rest of the financial world, one must keep in mind that subprime mortgages are a very limited product within the entire U.S. economy.
Subprime mortgages may affect the stock market to a lesser degree.
We're not talking about the end of the world here folks!
I'm not a financial genius, but I have seen the subprime mortgage industry all but disappear over the past 8 months. There has been considerable concern. Sensationalists speak of financial mayhem in the stock market because of these poorly performing loans. Other sensationalists imply that everything is just fine. (I hate to admit it, but these are typically people in the mortgage and real estate industry.)
I think the truth is somewhere in the middle.
Are subprime loans a mess? ABSOLUTELY!
Are subprime mortgages and easy credit going to destroy the world? I highly doubt it. While the mortgage sector is seeing drastic changes which are affecting the rest of the financial world, one must keep in mind that subprime mortgages are a very limited product within the entire U.S. economy.
Subprime mortgages may affect the stock market to a lesser degree.
We're not talking about the end of the world here folks!
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