Mortgage industry is tanking
if any of you are self employed or for whatever reason have to go stated on your loans, i would highly recommend that if you are not happy with your rate or if you have an adjustable rate, that you refinance as soon as possible. Stated income loans imo will be gone within the next 12 months, also two of the biggest lenders in the country went belly up today Novastar mortgage and Aegis mtg corp. These are not strictly sub prime lenders either, Aegis is actually an A paper lender. Things are getting really bad.
Wells Fargos mortgage rates went up 2% as well. |
so if I want to refinance, it's worse today than last week?
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Interesting. There is a guy in the mortgage industry in our ward. I found out yesterday that his office is shutting down.
I am guessing that there will be a fire sale on McMansions here in Utah soon, eh? |
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2 more companies just downsized, option one and First Horizon. They both let go about 75% of there sales force.
I think that this does force the feds hand but in reality its not really interest rates that are the big problem rates are not great right now but they have been worse. The problem is criteria has gotten so much tighter. We are back to the days where you need a 20% down payment on your house. No more stated 100% loans, no more no-doc loans, it is getting very very hard to get anyone approved. |
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btw, I wasn't being sarcastic. I am actually thinking of refinancing.
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You do know that the wave of creative financing, or more accurately, aggressive financing, is a large part of what was supporting speculation and driving pricing up sky high in most parts of the country? As usual the regulators and industry are doing the usual, closing the barn doors after the horses got out, which will make things get worse before they get better. As BYU71 said, I hope those who were loaning any amount to anyone with a pulse will go out of business rather than be rescued by Uncle Sam. |
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American Home Mortgage is going under too. They have hundreds of millions of loans they have promised to buy, but can't. This could just be the tip of the iceberg. If the housing market collapses the global economy could be in serious trouble.
I never understood why people were getting ARMS when rates were under 6 percent. Katie Couric is doing a special tomorrow night. I think she is going to talk about how there may be no money to lend in the near future. It'll be interesting to see what she has to say in her report. |
Hyrum i see your point however most of the subprime lenders have been weeded out already. Or they have changed there guidelines drastically. Now we are seeing A paper lenders fold. You know the ones that lend money to borrowers with perfect credit.
The most defaulted loan last year was not the 580 credit score, 1 month out of a bk 100% loan. It was actually a 720 FICO self employed borrower. How many on this board when they bought there first house or any house for that matter had 20% to put down? |
http://articles.moneycentral.msn.com...uidedPath.aspx
Although I don't really like Fleckenstein he does make some good points Jim Jubak's analysis http://articles.moneycentral.msn.com...nchSpread.aspx |
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We had 20% to put down because we both worked full-time for several years (before and after our marriage), lived in a shitty basement apartment, saved our money, and bought a condo well within our means in a moderately priced market. How revolutionary of us. I understand we're the best-case scenario, and for those who live in crazy home markets (e.g. California), have abnormal expenses (such as medical), etc., 20% is impossible, but, for a lot of the country's housing markets, it's not impossible to do it old-school. Hey, if the 0% down, 5% interest-only loan is right for you, so be it. But I think, generally, the predatory lenders and stupid borrowers must shoulder equal amounts of blame. |
the biggest problem is that people were buying too expensive of a house for their income. the average square foot of house in the 70s was around 1100 square feet. Its now 1700 square feet. Have families gotten bigger?
Another problem is that housing prices on the coasts are so high no young people can afford to live there. When my 1300 square foot house in Michigan would be worth close to 6 times its value in California there is something wrong |
I don't know how people do it in California.
My brother just moved to San Francisco and rents a two-bedroom place for 2k. I'm sure getting a house is far out-of-reach for him. |
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California's situation pisses me off. My brother-in-law has an interest-only loan on a $400K house, pays a little extra on principal each month, and will have to re-fi in two years into a conventional loan. He's making it, but he's stretched pretty thin for that 1700 square foot ranch in Santa Maria. Meanwhile, programs for low-income families are putting a few lucky ones into 2500 square-foot new constructions for less than $1500/mo. - mortgage, not rent. The middle class is being strangled (granted, it's still better off than the really poor), but there's no chance of relief - esp. with California's enormously expensive taxes and programs. |
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He could move to the south and midwest if he wanted to, but he chooses not to. |
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I have a good friend who is a realtor. Last summer he told me that he expected the bubble to burst in about a year. He said that there should be lots of big homes for sale dirt cheap. |
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I am most curious to see how areas like Herriman, Daybreak and others do during this period because their prices have risen so dramatically, they are now up against homes on the East Bench in similar price ranges and similar sizes (the biggest difference being new vs. old). |
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I have another friend who just built a $950K home in Alpine. It was a home show home and they didn't get a single offer. I am afraid he may go chapter 11 over this. |
The problem is that people will have seen a home go up in their neighborhood which is about the same size of their home and that home goes up for $400K...so they think (most homeowners think the same way), my home is better than that home so I will sell it for $425K. Nothing happens, so the guy grudgingly lowers his price down to $400K...nothing happens, it sits for a few months, people start thinking that the home has problems, and the owner lowers his price down to $375K and it finally sells.
The issue is now that the guy is not happy that he made $100K on his home (he bought it for $275K a couple of years ago)...he is pissed that he 'lost' $50,000. He never really had it, it was an inflated value in his head on what he thought the home was worth. Your home is only worth what people will pay for it but that is hard to understand when you are just coming out of a hot market and you think your home is a national treasure. Another problem is all of those people that just built homes or are building homes and they bought at the peak 6 months ago...so they are paying top dollar for a home that will be worth less when it is finally finished in the fall. They financed it thru the builders and they use these builder's agents. Talk about a recipe for disaster. |
one other thing real estate agents are up in the night a lot of the time on value. My parents neighborhood in eagle mountain for example.
They bought there house about 2 years ago for 176k 4 bedrooms 2 bathrooms about 1800 sq ft. Good value at the time. Now the neighbors across the street are selling there home same exact model for 250k but it was listed for 300k at first. Behind them same model just sold for 195k (which is a lot more reasonable). |
I agree with that Junkie...the problem with a lot of the agents out there is they talk to the seller and ask the seller what they want to sell it for...the seller gives them a number that is just crazy but the agent does it. It doesn't sell and it pisses everyone off.
Good agents spend the time to get the real market value. My wife was asked to sell a house and she came up with the figure of what to sell it for--around $400,000--at the highest. The seller said that was dumb and wanted to sell it for $450K. My wife knew that it was not worth it and ended up telling the seller that she would not sell it for that figure (she knew it was a ridiculous figure and didn't want her name attached to it)...well, a bunch of realtors lined up to sell that house for the price. It still hasn't sold and continues to sit and the price is dropping. This is just in SL where the market is slow but not brutal...I can't imagine how brutal it has become in Phoenix, LV and San Diego. |
Market is fine in Dallas. I'm sniffing for a new home, and I'm not finding any particular amazing deals.
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Here in far Northern CA we're seeing a very interesting market. It peaked about 2 years ago, and prices have come back but only slightly. Now we're seeing a multitude of homes on the market and none of them are selling. Buyers aren't biting on the inflated prices and owners are too stubborn (many out of pure necessity) to come down on the price. I get the feeling that prices are about to drop like a rock as inventory continues to grow.
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