[vietvet67]

First dose of castor oil.

[steel_resolve]

Um, why am I supposed to feel sorry for a mechanic that can’t afford a 400,000 house exactly? I couldn’t afford a 400,000 mortgage and I KNOW I make more than a mechanic.

[RegulatorCountry]

But Fannie officials have argued that raising the ceiling on their mortgage purchases could help calm turmoil in the mortgage market and avoid disruptions in the flow of credit, people familiar with the situation said.

Free needles for addicts in Amsterdam helps prevent AIDS, too.

[martin_fierro]

The market disruption came as crushing news for Gary Cecere, a mechanic who lives in Croton-on-Hudson, N.Y. Mr. Cecere said he learned yesterday that Wells Fargo & Co. was no longer willing to complete a planned package of two mortgage loans that would allow him to buy a $410,000 four-bedroom home in Mahopac, N.Y. Hugo Iodice, a branch manager at Manhattan Mortgage Co. who is acting as a loan broker for Mr. Cecere, blamed tighter standards imposed by Wells Fargo on Alt-A loans. A Wells Fargo spokesman had no immediate comment.
"I was getting ready to close [on the home purchase] this week, and they basically pulled the carpet out from under my feet," said Mr. Cecere. For now, he said, his wife, five children, two cats and a dog are cramped into a two-bedroom temporary apartment, awaiting a move. Mr. Iodice said he is trying to find an alternative loan for the family.

Oh, brother. Cue the violins.

[Signalman]

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.

[DownInFlames]

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.

[Mo1]

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

[PAR35]

mechanic who lives in Croton-on-Hudson, N.Y. Mr. Cecere said he learned yesterday that Wells Fargo & Co. was no longer willing to complete a planned package of two mortgage loans that would allow him to buy a $410,000 four-bedroom home

Perhaps the mechanic will now look for something he can afford.

[capitalist229]

Easy credit => inflation

Tight credit => deflation

Housing is going down

BUMP

[RockinRight]

BTW...there has been talk lately about brokers this, brokers that, they screw people by steering into subprime, etc...

Got news for you. Direct lenders like Countrywide’s and Wells Fargo’s retail branches are MORE likely to steer a customer into a subprime loan to get paid more. I interviewed with several, and the compensation structures at the big, nationwide direct lenders are such that there’s MUCH more incentive to steer a prime borrower to a subprime loan than there is at a broker, or a company with a warehouse line as I described above.

With a broker, points are points, what you charge in points is how your compensation is determined, period. There’s also the “backend” points you get from a lender, but this is a function of rate and that’s true whether base rate is 6 or 10. Whether you are putting someone in a $200,000 prime, conforming loan at 6.75% or a subprime loan at 9%, if you charge a point, you get paid the same on either loan. Why WOULD you steer them into the higher loan that is harder to sell?

With a direct lender, they pay in “bps” of the loan amount. A prime loan might be 0.35 bps, or 0.35% of the loan. A subprime loan for the same client might pay 1.35%. So on a $200,000 loan, prime might pay $700 and subprime $2700.

Anyone who says the direct lenders are less likely to “screw” the customer by steering into bad loans hasn’t worked a single damn day in my industry.