[QUOTE=HP49er;253712]BBT, up 2.13, +5.70% 
[/QUOTE]
Yeah, glad it partially recovered today. Funny thing is, we have one of the cleanest loan portfolio’s in the business…but it doesnt matter, every financial is getting slammed pretty hard.
Countrywide owns A LOT of home loans, what would happen if they went bankrupt, would some other lender have to buy the loans off them? How would affect the people that had Countrywide loans?
[QUOTE=casstommy;253676]Who bares the the majority of fault here?[/QUOTE]
It’s all the Observer’s fault. That’s whose fault it is.
For those people who know a ton more than me (pretty much everyone on the board who knows how to use proper punctuation), is this a good or a bad time to be buying? I’m not asking in terms of home prices (I know it’s a good time for that), but I’m asking in terms of financing.
I recently purchased a home and close on it at the end of this month. Now they’re talking about rates possibly getting cut, etc. and I’m like “wtf?”
So if that happens, I would have the possibility of refinancing of course, but I’m wondering if I should be regretting not waiting a few months to see if they cut it … or does it not matter really? (I guess I’m asking if I just got screwed by closing in August when a rate drop might be coming in September or near the end of the year).
All that being said, I got a nice deal on this house because the sellers in turn got a great deal on an upgrade house in a neighboring (richer) town, and they needed to move their house fast to free up the cash …
(insert evil laugh here)
It sounds like you did good, BT.
On the question of responsibility for this stuff. Something like half of loan applicants inflate their incomes, and a good portion of those supposedly do so by a big margin… but the lenders are ultimately responsible. (Or will the taxpayers be?) The invisible hands have no concern for consequences like these.
We should make changes to better regulate the market, no?
[QUOTE=EE9er;253739]Countrywide owns A LOT of home loans, what would happen if they went bankrupt, would some other lender have to buy the loans off them? How would affect the people that had Countrywide loans?[/QUOTE]
Nothing happens to the people who have a mortgage through Countrywide. Countrywide would sell the mortgage to another bank, but it wont affect your terms. Keep paying your payments just like you always do…just to a new bank.
I knew the feds would cut the rate discount rate today… but, I thought it would only be a quarter point.
Market is starting strong (of course).
[QUOTE=ninerID;253678]
The feds will most likely drop the rates by 0.5%, at least, in September.[/QUOTE]
Dang if you didn’t call that one! Discount rate though, not the fed funds rate.
[QUOTE=Brick Tamland, Weather;253744]For those people who know a ton more than me (pretty much everyone on the board who knows how to use proper punctuation), is this a good or a bad time to be buying? I’m not asking in terms of home prices (I know it’s a good time for that), but I’m asking in terms of financing.
I recently purchased a home and close on it at the end of this month. Now they’re talking about rates possibly getting cut, etc. and I’m like “wtf?”
So if that happens, I would have the possibility of refinancing of course, but I’m wondering if I should be regretting not waiting a few months to see if they cut it … or does it not matter really? (I guess I’m asking if I just got screwed by closing in August when a rate drop might be coming in September or near the end of the year).
All that being said, I got a nice deal on this house because the sellers in turn got a great deal on an upgrade house in a neighboring (richer) town, and they needed to move their house fast to free up the cash …
(insert evil laugh here)[/QUOTE]
Unfortunately, that is the way the system works, BT. If there is a rate cut in September and you decided to close then, but then there is another rate cut in October? You would essentially be “jipped” then. Unless you entered into a “float to lock” situation which basically gives you time to “lock” the rate in when you think it is “the best it is gonna get” … usually done for new construction though, and certainly has a window in which you need to lock before the actual close date (x # of days prior to closing). Would advise against refinancing any time soon. Sure, we may see a rate cut at the next Fed meeting in September, but that alone would not be enough to make it worth refinancing - unless you feel like throwing out some cash for getting a .25 better rate. It would take you a long time to recoup that cash (i.e. the amount needed to refinance vs. the savings in monthly payment), and that is on top of the fees you paid for the initial mortgage. Additionally, during this crisis, most lenders are tightening their credit guidelines, so it actually may be harder for you to qualify for the refinance this time around. (General statement there, not a reflection on your credit worthiness since I don’t know what it is.) Bottom line is, you should be in a fixed rate mortgage with a payment you are comfortable with. Not sure what adjustables will do over the next couple of years, but they are basically what has caused this “mortgage crisis” to begin with, so you are most likely better off with the more conservative fixed rate mortgage. That way, you know each and every month what your payments will be… (although your escrow payment may, at some point, cause that overall payment to go up due to property tax rate increases, property tax re-valuations, etc)
[QUOTE=jdm49er;253854] Not sure what adjustables will do over the next couple of years, but they are basically what has caused this “mortgage crisis” to begin with, so you are most likely better off with the more conservative fixed rate mortgage.[/QUOTE]
I know where you are coming from on this statement and I know what the media has thrown out there but I totally disagree about the ARM causing this “mortgage crisis”. ARM’s like all mortgage products (including option ARMs, interest only, 40 year fixed, 6 month LIBORS, etc.) are a good vechicle if you understand the loan and who should be obtaining them.
There is a lot of blame to go around on this liquidity pinch/ crisis from the brokers, to the lenders, to the credit agencies grading the paper bought, to the investors on Wall Street that had an incredible appetite for them.
The market will work itself out like it has in the past(94’,98’,02’ see any patterns) but there is a lot more pain coming over the next 12 to 18 months.
A very good read on the situation:
Wilbur Ross
Chairman and CEO, WL Ross & Co
I recently overheard two men arguing about who was better off. One boasted about his new car, the other about a plasma TV and so on, until one proclaimed, “I am better off because I owe more than you are worth.” The second man conceded defeat. This anecdote summarizes the mortgage bubble. Americans spent more than they earned in 2005 and 2006 and borrowed the difference. The federal government did the same. Everyone secretly feared this was unsound but wanted immediate gratification, so there was applause for talking heads who said global liquidity would make these borrowings safe. Alan Greenspan went so far as to suggest that people take out adjustable-rate mortgages.
Liquidity, however, is not about physical cash; it is mainly a psychological state. Subprime problems have consumed only trivial amounts of global cash but already have burst bubbles by shocking lenders. Clever financial engineering effectively had convinced lenders to ignore risk, and not just in subprime. A major hedge fund participated in a loan to one of our companies, but sent no one to a due diligence meeting. So I called the senior partner to thank him and tell him about the non-attendance. He responded, “I know. For a $10 million commitment, it wasn’t worth going to a meeting.”
When subprime issues first surfaced this spring, many major institutions said they had none, but recent quarterly write-offs show they did. They weren’t lying; they just didn’t know what they had. Their embarrassment has brought risk control back into vogue. It was always silly to lend to weak credits at discounted interest rates, and without documenting income and balance sheets and without appraisals. No amount of model building should have enabled Wall Street to take $100 of such paper and alchemize it into securities sold for $103. Models inherently assume a future similar to the past and therefore they fail when multiple standard deviations occur. Subprime models also did not capture ever more lax credit standards nor that real estate might suffer severe and protracted price declines, again proving that the two most dangerous words in Wall Street vocabulary are “financial engineering.”
Now that we have identified the cause of the disease, how severe and how contagious is it? The present $200 billion of delinquencies will grow to $400 billion or $500 billion next year because $570 billion more low, teaser-rate mortgages will reset to market and consume more than 50% of the borrowers’ income. Therefore most of the loans will be foreclosed or restructured. Probably 1.5 million to two million families will lose their homes. Meanwhile, few lenders will put mortgages on the foreclosed houses, so the prices will plummet. Despite these tragedies, total losses will probably be less than 1% of household wealth and only 2% to 3% of one year’s GDP, so this is not Armageddon. However, even prime jumbo mortgages will be more expensive and more difficult to obtain.
What I think is insane is you pay the lender over the phone they charge you.
I only did this once when I was at the payment deadline, & I didn’t do it again.
How crazy is it to charge someone who’s giving you cash?
If anyone wants to give me cash, they can always do it for free. I’d be glad to get it.
“Greed is good” speech would have fit perfect about 12 months ago.
because Wall Street enabled this mess in the first place. How so? By happily sucking up hundreds of billions of dollars’ worth of suspect mortgages from marginal U.S. borrowers-and begging mortgage makers to create more of them. The Street sliced and diced this financial toxic waste into a variety of esoteric securities, making a nice markup when it sold them and generating a continuing stream of profits when it made markets in them.
Somehow analysts at credit-rating agencies, looking at computerized scenarios rather than at the real world, decided that the bulk of the securities backed by these trashy loans could be rated triple-A.
It’s really amazing: Most of the loans to substandard creditors borrowing 100% of the purchase price of homes they couldn’t afford were rated the same as GE and the federal government. That makes no sense. But the money rolled in, and Wall Street-by which I mean the world’s biggest and most important financial institutions-didn’t care about the real world or ask any questions. It was too busy making money, and cashing bonus checks generated by subprime-mortgage profits.