At the Mortgage Bankers Assoc. meetings today a presenter asked the crowd "have any of you seen any evidence of tighter credit conditions?" Not a single hand went up in a room with about 50 people.
This is to be expected, since sales rates are still way too high. Why? Well, think of it this way - where's the money gonna come from to pay for this overpriced crap? The smart money (cash) is long gone from the market. The late to wake up is trying to sell, not buy, and the people who are finally trying to buy a home to live in havent been making much of any gain in real income, and in terms of buying power towards a house are losing ground constantly up until recently. So, given that prices have only fallen a wee bit even in the markets that are declining the fastest, there is no real support for this sales level, UNLESS, you keep offering people the types of loans they really cant afford.
What does this mean? We have a hell of a lot of downside left, that's what it means. Peeps sometimes, is just plain stupid.
mort_fin, I didn't get to the MBA this year (there's germs, then there's cooties. Perfect Petri Dish. Besides, I no longer really care.) But I talked to an old friend on the phone last night who tells me that there was a giant argument in the hotel bar over whether "stay the course" was compatible with "adapting to losses on the battlefield." And yes, they were talking about mortgages, not Iraq.
I also got an update on one of our more hated mutual acquaintances, the one who stood up in a meeting a couple of years ago and proudly announced that he had an 80/20 IO mortgage because it was such a powerful wealth-building tool. (The guy is known far and wide as a couple of tranches short of a full security.) Anyway, he's in his third job in two years, the $650M home financed with the IO has been on the market for 9 months, he hit the wall with his 401(k) loan payments and had to cash it out, and he didn't show up at the MBA because his company isn't sending anyone this year: cost cutting firmly in place.
It wasn't all bad news, though. My friend ran into a deal manager for a big scratch & dent dealer who asked about me and whether I had an updated resume ready. Apparently someone out there thinks it's going to be cheaper to offload the "mistakes" than to follow the new guidance for portfolio management. Not a rush for the exits, mind you, just someone out for a brisk stroll. So far. So I am told.
"Another 13 percent were "option" adjustable-rate loans, which allow customers to pick their payment amount, including a low-cost choice that covers neither the full interest nor the principal."
What I've been so slow to realize is that lenders can avoid moral hazard by this phrasing: "Customers can pick their own payment amount," which makes it sound like the borrower is in control. The reality, though, for 90% or more of option loan borrowers is that the only payment they can afford is the lowest one -- so really, there is no "picking" about it. Maybe the regulation for option loans should be that the borrower has to pay the maximum amount for the first year, then after that can "pick" their payment? That is, if they survive the first year of payments.
Speaking of non-traditional mortgages, Countrywide missed their estimated earnings and the stock is up this morning. I guess because the market sees so much future growth.
FirstFed also released earnings. They specialize in pay option ARMs. They had pretax income of $55m, $41m of which is the accounting gain from borrowers increaseing neg am. Their share price is up too.
I recently published an article on mortgage loans, tips on how to make them work for you and other forms of mortgage financials here is a quote from it, in case you are interested:
Smell a Good Deal for a Real Estate Try to discover a property that has already got some equity in it, when you purchase it. Equity represents the value of a real estate, a property after you have paid any mortgage or other charges relating to it.
Try to Get a Second Mortgage on the Real Estate You could try to be more creative and ask the seller whether he would be willing to have a second mortgage on that home. Thus you could set up an agreement with the seller through which you will have to pay monthly an approximate sum of $200, for instance, on $15,000 of the price of the real estate (plus or including the interest rate), for the second mortgage.
Save Some Money to Pay in Advance Some lenders might give you a full credit if you come with at least a small percentage of the sum. This would grant you supplementary points for getting the credit and would also lower the interest rate e key point of any mortgage refinance program.
Dont Give up, Go Further dont trust the first broker who tells you that there is no hope for you. You will finally find someone who could offer a viable solution, just keep asking and searching. An alternative is to apply online to mortgage services. Thus your application would be seen by more lenders and you might get more offers to analyze your solvency.
Improve Your Present Credit Score by not applying to credit cards, auto loans or other loans, if possible. Too many inquiries would also affect credit scores. Another important thing you should do to improve your credit scores is to acquit your current duties and payments on time.
If you feel this help, please drop by my website for additional information, such as mortgage calculators or additional resources on mortgage loans.
SPAMing this site looking for non-traditional mortgage origination business is like showing up at my sister-in-law's all-organic vegetarian food club with a half side of 'downer' hambuger. Takers anyone?
You'd have to be one 'mad cow' to think you'd get much business.
At the Mortgage Bankers Assoc. meetings today a presenter asked the crowd "have any of you seen any evidence of tighter credit conditions?" Not a single hand went up in a room with about 50 people.
This is to be expected, since sales rates are still way too high. Why? Well, think of it this way - where's the money gonna come from to pay for this overpriced crap? The smart money (cash) is long gone from the market. The late to wake up is trying to sell, not buy, and the people who are finally trying to buy a home to live in havent been making much of any gain in real income, and in terms of buying power towards a house are losing ground constantly up until recently. So, given that prices have only fallen a wee bit even in the markets that are declining the fastest, there is no real support for this sales level, UNLESS, you keep offering people the types of loans they really cant afford.
What does this mean? We have a hell of a lot of downside left, that's what it means. Peeps sometimes, is just plain stupid.
mort_fin, I didn't get to the MBA this year (there's germs, then there's cooties. Perfect Petri Dish. Besides, I no longer really care.) But I talked to an old friend on the phone last night who tells me that there was a giant argument in the hotel bar over whether "stay the course" was compatible with "adapting to losses on the battlefield." And yes, they were talking about mortgages, not Iraq.
I also got an update on one of our more hated mutual acquaintances, the one who stood up in a meeting a couple of years ago and proudly announced that he had an 80/20 IO mortgage because it was such a powerful wealth-building tool. (The guy is known far and wide as a couple of tranches short of a full security.) Anyway, he's in his third job in two years, the $650M home financed with the IO has been on the market for 9 months, he hit the wall with his 401(k) loan payments and had to cash it out, and he didn't show up at the MBA because his company isn't sending anyone this year: cost cutting firmly in place.
It wasn't all bad news, though. My friend ran into a deal manager for a big scratch & dent dealer who asked about me and whether I had an updated resume ready. Apparently someone out there thinks it's going to be cheaper to offload the "mistakes" than to follow the new guidance for portfolio management. Not a rush for the exits, mind you, just someone out for a brisk stroll. So far. So I am told.
We saw a sign from a Realtor in front of a house in suburban Boston this weekend.
"Own this home. No money down!!"
"Another 13 percent were "option" adjustable-rate loans, which allow customers to pick their payment amount, including a low-cost choice that covers neither the full interest nor the principal."
What I've been so slow to realize is that lenders can avoid moral hazard by this phrasing: "Customers can pick their own payment amount," which makes it sound like the borrower is in control. The reality, though, for 90% or more of option loan borrowers is that the only payment they can afford is the lowest one -- so really, there is no "picking" about it. Maybe the regulation for option loans should be that the borrower has to pay the maximum amount for the first year, then after that can "pick" their payment? That is, if they survive the first year of payments.
Speaking of non-traditional mortgages, Countrywide missed their estimated earnings and the stock is up this morning. I guess because the market sees so much future growth.
FirstFed also released earnings. They specialize in pay option ARMs. They had pretax income of $55m, $41m of which is the accounting gain from borrowers increaseing neg am. Their share price is up too.
Hello,
I recently published an article on mortgage loans, tips on how to make them work for you and other forms of mortgage financials here is a quote from it, in case you are interested:
Smell a Good Deal for a Real Estate Try to discover a property that has already got some equity in it, when you purchase it. Equity represents the value of a real estate, a property after you have paid any mortgage or other charges relating to it.
Try to Get a Second Mortgage on the Real Estate You could try to be more creative and ask the seller whether he would be willing to have a second mortgage on that home. Thus you could set up an agreement with the seller through which you will have to pay monthly an approximate sum of $200, for instance, on $15,000 of the price of the real estate (plus or including the interest rate), for the second mortgage.
Save Some Money to Pay in Advance Some lenders might give you a full credit if you come with at least a small percentage of the sum. This would grant you supplementary points for getting the credit and would also lower the interest rate e key point of any mortgage refinance program.
Dont Give up, Go Further dont trust the first broker who tells you that there is no hope for you. You will finally find someone who could offer a viable solution, just keep asking and searching. An alternative is to apply online to mortgage services. Thus your application would be seen by more lenders and you might get more offers to analyze your solvency.
Improve Your Present Credit Score by not applying to credit cards, auto loans or other loans, if possible. Too many inquiries would also affect credit scores. Another important thing you should do to improve your credit scores is to acquit your current duties and payments on time.
If you feel this help, please drop by my website for additional information, such as mortgage calculators or additional resources on mortgage loans.
Regards,
Michael
No, it doesn't help. Go away.
LOL.
SPAMing this site looking for non-traditional mortgage origination business is like showing up at my sister-in-law's all-organic vegetarian food club with a half side of 'downer' hambuger. Takers anyone?
You'd have to be one 'mad cow' to think you'd get much business.