Posted on 08/08/2007 8:02:48 AM PDT by Hydroshock
“That makes sense if they want to eliminate the possibility of fudged paperwork from the brokers.”
I don’t want to pick on them directly because there are some good ones out there.
But yes that is what appears to be going on.
The major banks/mortgage lenders have really strict compliance and quality control things place.
Sometimes they seem to border on the ridiculous, but they are in place for a reason.
I agree, good brokers will hurt in the tightening up.
If someone can’t afford to buy a home using a solid conventional loan, not one of those zero principal, variable interest smoke and mirrors deals that were all the rage a few years ago, then they shouldn’t even think about buying.
I’m glad the sub-prime mortgage market finally crashed.
The fact that the Fed left the Prime Rate unchanged speaks volumes. Those wishing/needing to refinance are going to feel the full effect of the housing bust. I do not know the paper value of the total mortgages sold to WS, but their paper value is less than the stated value of comps.
As housing continues to slide, the effect on WS will be the same as in the 30s where credit was being used to finance deals. When credit tightens up, those holding worthless or less than face value contracts will be left out in the cold. It will be interesting if these holders call on the mortgage to be paid, if it can be legally done.
This has huge implications on our economy. Consumers are so much in debt, they have extracted “equity” from their homes to have fun. Using your home as a credit card to buy cars, clothes, boats, and other big ticket items is just plain stupid.
I’m not an expert int his area .. but the rates are not so steep .. it seems more like people are buying homes that are out of their price range
“it seems more like people are buying homes that are out of their price range”
It’s just that simple.
Yep .. heck I'd love to have a bigger home with all the bells and whistles .. but I also like to eat, send my kids to a good school and have a roof over our heads
I guess it's all about priorities and what's really important
Two seperate thoughts.
Subprime loans are not and never were the “exotic” negative amortization loans we heard about. Those are a seperate issue.
Subprime should return to what it was before. “Yeah, we’ll lend you money with your credit score. But, you need this, that, and this...” It’s the lack of the “this, that, and this” that created the problem.
Using exotic loans is fine, IF, you are still able to afford a “normal” conventional loan. Don’t do it if it’s the only way you can buy the house.
Perhaps the mechanic will now look for something he can afford.
You are right.
They can't. The holders face two risks - refinance if rates drop, and default, no matter what the rates do. Indeed, it is fairly rare for a lender to actually hold the whole mortgage. Loans are generally packaged and securitied.
Thazt is the deal, the mortgage brokers are screaming now because they cannot move the paper anymore.
Tight credit => deflation
Housing is going down
BUMP
How do you know he can’t afford it? There’s not enough other information there to know that.
And try finding a home in Croton-on-Hudson, or within 60 miles of there, for much less than that that a family could fit in.
DUH!!!
Oh, man...shades of Chavez. The only thing preventing any businessperson from offering a product at less than the cost of providing it is economic sanity. Again, it's not possible to lend money at a lower rate than cost of funds...and no, you can't make it up on volume.
Your irrational hatred of modern finance seems to have driven you around the bend.
For any reading this thread, who do so in the name of wanting to understand finance and mortgages more...this is not the place to look for knowledge. The poster is advocating financial voodoo.
Yes, but they'd make it up on volume, right? (/s)
That will also be news to all those investors, some retired, who bought CMOs...their contract is about to be violated.
You really don't understand the industry, do you? The turmoil we've seen on the alt-A and subprime side is among lenders, wholesalers who offer money to retail brokers.
A broker never owns the loan...the loan is made in the name of the lender, and closed in the name of the lender, with the lender's money, on the basis of the underwriting approval from the lender.
You appear to know just enough to be dangerous...to anyone taking you seriously.
But it’s not just the “evil” mortgage companies (I wish you’d stop calling me evil) suffering...it’s anyone who has concern for the value of their real estate, or the ability to sell it, or refinance it, or anything. The effects are a lot more far-reaching and the “I’ve got mine” attitude you have will disappear quick when your own financial portfolio starts to suffer.
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