California Housing Bubble Popped, but still falling…look out below
Posted on April 15, 2008
Filed Under Foreclosure, Lenders & Banks, Mortgages | Leave a Comment
I really don’t have much to say other than me too on the following article.
Excerpt from it:
Frankly, all this hyperbole of reaching a bottom is wishful thinking and is completely devoid of the economic realities surrounding us. But what can you expect from an industry that kept chanting a mantra of “home prices only go up” for a decade? Now, it is a primitive form of the argument that “we are inches away from a bottom.” Well guess what? Many folks actually bought this line in California and will realize very quickly that we are nowhere near a bottom….Read more of the article.
Fannie Mae Underlines “Do the right thing!”
Posted on April 15, 2008
Filed Under Foreclosure, Lenders & Banks, Regulations & Government | 1 Comment
Fannie Mae in its release on Friday made it abundantly clear that they will see that there are repercussions for the entitlement mentality. As housing prices drop many people have taken the approach of ‘oh well it was great while it lasted’ and decided it is better to cut their losses and walk away from their home instead of figure out how to make lemonade from lemons.
When we purchase a home we purchase it in fact to make it a home, place to live, raise a family, build memories and yes as an investment not as a 1-2 year or less investment to flip and move on talking about how much money we made. If you didn’t buy your house with that pretense in mind, unless something drastically changed in your life then, “Houston you may have a problem”!
“Quick cash return” that is great if you can do it, so is winning in vegas, but all good things must come to an end. Buying a home is more than a trip to ‘Housing Vegas’ where you cut your losses and hop the next plane home and Fannie Mae has put its foot down to penalize people who think that way. If don’t make an effort to save your home or even care about your credit enough to make it work to stay in a home and trying to save it they will not gurantee someone buying a home who’s home went into foreclosure for 5 years and then they must have a 680 or better credit score and 10% down. Take it from me that is tough stuff considering we are just leaving 40 year loans, with interest only, no money down and 125% of value on stated income. Welcome to 2008 ‘the year to pay the piper’!
The foreclosure and Housing Crisis plot thickens
Posted on April 15, 2008
Filed Under Foreclosure, Lenders & Banks, Mortgages | 1 Comment
Foreclosure numbers and home builder ’sentiment survey’ through March 2008 were released today. (Read USA Today Article) The numbers continue stay low or worsen and with a large number of “sub prime” loans resetting in May and June things stand to get much worse.
It is expected that 1/4 or more of the home going on the market this year could be bank owned properties. This problem not only continues the problem of falling home prices, but hammers the bottom line of the banks. Now we not only need to discuss how to help people stay in their homes as the banks sure don’t want them, but use some logic in how to offer some incentives for people to be able to qualify for homes.
I mean say you have missed the housing bubble, sold your house or just want to buy - lenders are going to have to give some way for people borrow money and get back in these homes or the nations lenders are going to end up going into the real estate rental business.
MC Cain not retracting, but rethinking his “Mortgage Crisis” position
Posted on April 11, 2008
Filed Under Foreclosure, Lenders & Banks, Mortgages, Regulations & Government | Leave a Comment
McCain didn’t exactly change his position on what to do about the crisis the nation is facing, but he did figure out that good politics is not always, scratch that usually not compatible with completely speaking your mind. In principle I think in his California speech of a few weeks ago (click here) as well as his speech in New York ’shifting his position’ essentially, say the same thing - it is not the governments responsiblity to relieve you of yours, however if you have fallen on bad times because of circumstances beyond your control or you are trying to do the right thing maybe we can or will help you.
This obviously differs from the mind set people want of “it is not my fault” please help me! Well as just Jimmy Buffet finds in his song “Margaritaville”, it’s nobodys fault…it could be my fault…it’s my own damn fault. Well if it is then you probably should suffer, I mean there is a consiquene for your actions, just ask my 7 year old!
The counter point is there is justice, there is mercy and there is grace. You can experience justice and mercy, but grace comes with a price, who pays for it and who deserves deserves it? As the legal system shows guilt and defense are the opposition to justice to make the scales equal the justice must balance the two (justice is served - or results not always how you thought). The fix again for the mess is like marriage easy to get into, but not so easy to get out.
It is going to take time to fix this mess! To Mr. McCain’s credit he may not know much about the “economy”, but hopefully common sense can weigh out somewhere. As an old lawyer once said “90% of the law is common sense”, I mean you want always be there to pick up you kid when they fall so they have to learn to do it on their own. I think both party candidates have a gap to get to the right spot in the middle.
New York Times Article on Mr McCain
What is the answer to “Foreclosure Crisis”?
Posted on April 2, 2008
Filed Under Foreclosure, Lenders & Banks, Mortgages, Regulations & Government | 1 Comment
Well I have been meaning to write on this since the news came out last week in the Florida-Times Union Article about Georgia trying to add new laws to help with and slow down the “foreclosure crisis”.
Well today is the day to write I guess. Legislation or no legislation is the question? The reality here is slowing down or preventing foreclosure is not necessarily the answer. The other questions that must be asked first are…
- Are they willing to try and work through the problem of a delinquency - because of a ‘valid reason’?
- Where they duped?
- can they just not get new financing, because adjustable rates (they are probably close to rate when they refied in the first place or purchased)?
- How much cash have they taken out in refi-cash outs or home equity loans?
- or are they just mad because housing prices are falling and they paid too much
If it is any of the last three then, I don’t really have much sympathy. If there is a real need or they were truly duped - that’ll be tough to prove, but if you were duped you should be able to make a pretty good case of it - even if your own stupid somewhat compounded it. (Reference mama - “if something seems too good to be true it probably is”).
There are sources, if your bank won’t work with you directly to take some of the loss from the housing over inflated prices or reamortizing or recasting your note (Mortgage Mitigation Companies). I don’t think it is practical or logical to legally force lenders through legislation to do the right thing.
I mean in my life as probably in yours I have found that when push comes to shove you can make a deal or figure out how to do something when you really have to (with the given you haven’t lost your job or had a death or other major blow). Banks should fairly rapidly figure this out and become much more willing to work through problems instead of turn a blind eye or be hard nosed. Unfortunately, there will be some suffering by both the banks and John Q Public, but it should work out. I don’t think political pressure without a lot of due diligence is the answer - did I say it A LOT OF DUE DILIGENCE
Nothing like now having a bank walk in the shoes of the “common man” (I mean that collectively ladies)!
Mortgage broker license change is not the answer
Posted on March 31, 2008
Filed Under Mortgages, Regulations & Government | 1 Comment
Read my comments as posted to the wsj article We Don’t Need a Mortgage Guild
I definitely don’t think changing the licensing of mortgage brokers will have a direct impact on the future of mortgage problems. I have been a licensed insurance agent for nearly 20 years and I definitely don’t think that my license, any other agent or mortgage brokers license has any control over claims, ability of person to pay or other issues with a loan or insurance policy.
The fact of the matter is blame for this crisis lies with the lenders, true the mortgage broker has some part in this, but to your point of limiting good sales people or smart people by licensing, goes the same with the licensed ones. That is to say a good sales person will figure out how to abuse you with your own products or they will know it better than you, the strengths, weakness and ability to sell it. So you set yourself up if you don’t do your homework. It has always been my approach both with my business and the agents who produced for me that you shop all options and then based on total price or payment terms you fit that to the customers needs and wants - assuming all coverage is equal.
I feel there is a need for mortgage brokers, just like independent insurance agents. However there must be a balance between “greed” to getting new business and actual “real underwriting”. I mean if you can’t base your lending practices on some methodology and gain some predictability just like insurance then Vegas baby here we come and it is purely a gamble! Hey what do you expect other than you win some you lose some.
It appears that in the haste to make money much of the sensible lending practices of the past 100 years went out the widow much like IPO’s during the dot com boom.
Commericial Markets now spooked by Credit Crisis
Posted on March 31, 2008
Filed Under Lenders & Banks, Mortgages | Leave a Comment
Commercial has appeared to be somewhat out of the fray during the current “credit crisis” it appears now that wall street and in turn lenders with no secondary market for mortgage back securities are in effect putting the same stops on commercial lending. Commercial lending which has also succeeded as a bi product both directly and indirecty of the growth and past gains of the residental market will now prove out if the yeilds, loans and risks in it were as wild as the sub-prime and other lending practices in the residential market. Read some stats on the commercial sector.
McCain’s view on the current Credit Crisis
Posted on March 29, 2008
Filed Under Foreclosure, Lenders & Banks, Mortgages, Regulations & Government | Leave a Comment
See my response to John Mc Cain’s opinion on the “foreclosure crisis” in orange register.
Politics aside, I believe we must take a long look at the impacts of “help” in this case. As our market systems is designed for supply and demand and to have market cycles. It is unfortunate when the market cycles are created or compounded by the greed of; in this case lenders.
Unfortunately some who don’t deserve it may suffer, but the case is more of the one’s who do deserve it will get their just deserve. If you have a “bad mortgage” or problems as a result of this current credit crisis, if you have a steady income and you are trying to do the right thing and pay your mortgage then you have options.
If you are mad because you are paying too much or you home value fell when you were betting on that new home equity loan this year then you may have a problem.
My foreclosure is someone else’s fault!
Posted on March 19, 2008
Filed Under Foreclosure, Lenders & Banks, Mortgages, Regulations & Government | Leave a Comment
I agree we have some deflationary issues not inflationary issues and mortgage rates will at best stay steady or continue to rise. The problem is the knee jerk reaction of the lending (banking) industry. They lend you money when you don’t need or make it “possibly impossible” – that is to say they appear poised to lend you money yet make it impossible for you to qualify. This combined with the herd mentality got them into this mess. Unfortunately entrepreneur and banking are not compatible terms. Lending with good practices is what should have continued, but greed won out over qualified buyers. Read Boston Globe ArticleI believe the entitlement mentality of today’s society compounds the practices allowed and condoned during the most recent real estate boom, in part and mainly spurred by the departure from traditional lending standards. Much like they were saying a few years back in the “dot com boom“ the “old traditions” of valuing companies is passé. Well case in point the frenzy of the moment is what proved to be faulty! Basically as the dot com stock market frenzy ended the same thought process just reinvented itself in the real estate industry almost immediately after the dot com bust. Once again “old lending traditions” prove that rules and standards are usually in place from a time tested method and things don’t just ‘poof’ – change overnight.
I think that much like credit scoring has made it’s way into insurance rating in the last few years, stability should make it’s way into lending practices. I mean you have a good job, you show you can and have saved, you have even designated money to your church or charity on a consistent basis, and you have shown you can stick with a job, not just change to the next best paycheck or place – (reference loyalty) might have some predictability as to whether someone, may not only make their payments and have some heartache in bolting when the real estate market doesn’t continue its stratospheric rise to ridiculous levels and actually corrects as all things do in a market economy.Again look at the past to help predict the future, it works in insurance, it is not just about the LTV (Loan to Value) and the rate or the credit score and the dollars, but the person and their commitment. Why are they buying, what are their investment goals, not just their capacity. Granted things change, stuff happens, and people change, but greed usually clouds peoples thinking lenders included!
News flash smoking can cause cancer! Should I be able to sue because I am lazy or uninformed? Buying property is typically the biggest investment of someone’s life, don’t you think with something that can effect the rest of your life it would or should require some research? It is not the minutia (crap) in the middle of the mortgage contract that bites these people it is the top sheets – you have x payments of x amount and then it will adjust to x + prime, which by the way today would be x% interest and cause your payment to be $. This is not a hard question to see from the surface or certainly ask, but if you have the I want it now we’ll worry about it later mentality, because I can get out of it, well then hello – you are in default and this has to be someone else’s fault, because I was taught and it has been reinforced that I am not responsible for my own actions, I CAN BLAME OTHERS AND THEY WILL PAY!
I mean people deserve a second chance, an opportunity to make things right, wrongs deserve to be righted, honest people may have made a mistake, but asking simple questions is everyone’s duty especially in the “purchase of a lifetime”! Honest people who were defrauded, YES emphatically YES they deserve a chance, but a “bailout” of people by the tax payers or anyone else is not profitable nor helpful in teaching the rest or probably most of the people in trouble to learn from their mistakes of failing to ask how can I get this loan? How can I afford this? What’s the catch? Gee…those are simple prudent questions for something I intended to keep forever!
Lenders working with people to fix possible predatory lending or confusing or unfair rate changes may be a workable solution, keeping in mind they are in the lending business to make money, not be benevolent, but fairness should be part of every contract! This is a lenders opportunity to not only help someone and do the right thing, but save themselves and possibly the tax payers a lot of money, by being willing to “make a deal” not just point the finger and use the same entitlement cry of ‘it’s someone else’s fault, please don’t make me get in trouble!”
The largest Ice Berg of the Mortgage Crisis has Started to Melt
Posted on March 16, 2008
Filed Under Foreclosure, Lenders & Banks, Mortgages, Regulations & Government | 1 Comment
Well the beginning of what in my opinion will be tough times for several banks and brokerage houses began at the end of last week. I have considered and talked about a lot in the last few weeks the fact that I feel we are only starting to scratch the surface of what will happen as result of the greed and crazy real estate boom we have been experiencing for the last several years with the historically low rates.
Well Bear Stern when down in a “flash fire”, no blaze of glory there! (Forbes Article) I have considered that the misfortunes of people and banks alike in the coming months and years will be a great opportunity to profit from the crisis if you have not gotten caught up in the frenzy of “flipping real estate”. !
However, Friday while talking with a friend after the Bear Stern news broke he brought up a wrinkle I hadn’t considered…”do you think this could cause a run on the banks?” WOW hadn’t thought of that! I would hope not considering the age in which we live and considering the last “big” stock market crash didn’t really create a frenzy (Mark that as Black Monday October 19, 1987). This is somewhat different that was stock related as was the burst of the dot com bubble, but this is real estate; globally or certainly nationally for the U. S.
Will this cause a crisis the magnitude of the Savings and Loan debacle of the 80’s maybe? Should you fear that your money may go poof with your local bank or credit union? Probably not, but you should be prudent about not only the $100,000 FDIC or other government backed insurance at your bank or credit union and knowledgeable about what all and how much has that mutual fund in your retirement plan invested in Mortgage Back Securities.
Bottom line here is be informed, don’t panic and talk to your mortgage company if you are having problems or call a mortgage mitigation service like US Homestead.com or one of the many others that can help you figure what the best move for you may be.
keep looking » 
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