Subprime Market, on Life Support
So far about 38 subprime lenders either imploded or just closed doors. Maybe more.
Personally I blame secondary for allowing overextended underwriting protocols to people with with challenging backgrounds, only to rip the rug out of the lenders who originate them, leaving both borrower and lender dried up.
I mean, c'mon, seriously, if you're going to fund a lender who specializes in the subprime market, not to mention ALLOW underwriting guidelines to be more than lenient AND expect major revenues, you HAVE to expect some losses. Seriously, that's why in the manner of investment, you must expect even a high degree in risk. Nothing is guarenteed.
To protect the investors, all you have to do is just tighten up the lending guidelines and minimize risk, not pull the rug on the whole operation and put people out of jobs to create a market collapse. Personally, that's just plain stupid and most likely irresponsible.
That's my opinion.
I know what you mean. Hopefully Congress will put restrictions on investors of subrime lenders to not just simply 'halt all funding', but hopefully to push a little more restrictions on investors to find alternatives to protect their investments.
As a Mortgage and Financial Professional, too many clients homes and personal finances are more at stake than just losing a regular client's portfolio and subjects of margin calls.
"No man's life, liberty or fortune is safe while our legislature is in session."
Philo well put.. I think that the market like anything that gets frenzied needs a correction ..BUT the worst thing that can happen is that people let it get legislated to death.. sigh ..
I love my country but I fear my government..!
i believe in personal responibility. Blame the person who bought the loan , not sold the loan to them. remember, 1 trillion of adjustable rate loans are resetting this year. I just hope it is subprime only that blows up. how many people do you know living above their means with no equity in their houses or investment accounts????. can they handle an extra 1k a month in payments when the mortgage rate resets? I don't want this to sound doom and gloom and i do not want to see this happen but i see a potential blowup. Maybe spitzer will get off our backs and go after the mortgage business. I don't agree with that, but if it gets the regulators off our backs, so be it.
Uhhh... Spitzer is a governor now, making enemies in the medical field as he tries to straighten out the health care mess in New York.
Spitzer was never on "Our Backs" he was on the backs of mutual fund companies and brokerage firms in bed with each other and letting fund switchers trade after hours. Then the firms said, "You're right Eliot, we're going to crack down on our brokers and make sure they stop ripping off those clients!"
How'd it get to be our fault? Because we were the only group that didn't have a representative in the room, which made it easy to blame everything on us!
Wise up! RISE UP!
spitzer was never on our backs. management just had to justify their errors so they got on our backs instead, even though we did not cause the problems. i stand corrected.
Make it 39 lenders now down the tube. 3/4 of my pipeline is subprime, geez. This keeps going like this, my lender list is going to be non-existent and I'll definitely be struggling. I wonder if the Fire Department is hiring?
WSJ had an article about a guy profiting from all this subprime mess. He buys foreclosures sight unseen, all over the country, for dimes on the dollar. (Example: He bought 6 homes for $36,000, recently.) Then he sends his son to view the property and decide on a selling price. He never fixes up the property. His son inspects it, then decides on a selling price. His son handwrites a "For Sale" sign with a toll-free number and tacks it up on the door.
Typical reselling price is $36,000. The guy does owner financing with the buyer putting $500 down. The guy always tries to structure the monthly payments for less than the rental rate for the area. If a buyer pays the mortgage on time for 6 months, the guy sells the mortgage to a finance company for 75% of what's owed on it.
He makes over a million per year doing this.
Funny, I'm one of the consultants/company's that buys Seller Financed Notes. He's probably one of my clients on simo's. lol. I buy all kind of notes, residential, autos, boats, commercial, etc, all that is seller financed or carry-backs. I also buy Structured Settlements, Invoice and Medical Factoring, blah blah blah.
The only thing that home-owners can do is to make aware-ness that they have the ability to carry-back their own notes with a substantial money-down, and sell the note to people like me. All they need to do now is gather the education to do it and of course make sure it's recorded.
This is a whole new "untapped" market now and it's in the consumers hands. I've always had this philosophy, "When one market folds, many more will open". This is where I come in.
I was kidding about the firefighter gig, lol. It's just sad that these poor borrowers are going to lose their homes, go into foreclosures, continue delinquencies, etc. 2007, the beginning of a sad sad year.