Yes things are not going to be better for awhile. As a 30 year veteran of the mortgage industry underwriting, managing and being a mortgage broker for 17 years I can tell you though that the mortgage business runs in a cycle and as soon as the business falls off they come around and tell the underwriters to start loosening up on the underwriting. Then the no income verification loans come back and yes they will. If interest rates rise the ARM’s will come strong and then down the road another refi back into fixed. It is age old.
The difference IMO this time around is the high unemployment and that combined with the huge shadow inventory the banks are still holding is providing a different dynamic. The banks use those REO’s in their asset column and they show the value based on the time the loan was made so it bumps up their asset column. If they sell the property then take the write down it erodes their assets on paper and they can end up showing that they are undercollateralized. Which IMO a lot of the banks are undercollateralized. The only thing making them look solvent is this bogus REO inventory showing inflated value.
As long as Obama is in office its not going to change. We have a long slog ahead of us.
I’ve worked in the mortgage industry as well; see # 18. There is such an oversupply of housing that today they have to traffic children from Central America to fill it. The demographic trend would indicate that only massive infusions of foreigners will even keep the current housing stock occupied.
The mental scars from this economy will last for decades; few people will sink ten years of payments into a property just to lose it when their job leaves.