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HLS
ParticipantThink of debt as manure.. the more you spread it around over a wider and larger area, it smells the same to everybody who thinks that it’s the normal smell. A bad pile here or there doesn’t get anyone’s attention. It’s not all going bad at the same time. Just like a Madoff scheme, new money coming in covers up for old money..
There is so much manure(debt) out there that is traded around and swapped, it makes a 6 deck blackjack game in Vegas look tempting.
Some of this debt will never be paid back, ever.
Some will be paid off at par, another huge amount will be settled for less than what was originally borrowed..and part will get paid back with greatly inflated dollars.If there are enough profits from one side, it will offset the losses from the other. Creative accounting and Level 3 assets (off balance sheet)
will bamboozle their books forver.Fractional reserve system allows for around $10 in loans for $1 on the books. If 10% of the loans go 100% bad, in reality they are wiped out, but by not marking to market, give the illusion that they are solvent and all is well. A loan mod that continues to generate revenue is preferred to foreclosing and admitting to a $200,000 loss.
A $200,000 loss can indirectly affect $2,000,000 worth of loans.Illusion is comforting to tens of millions which restores confidence in the “system”
Hedge funds, Bear Stearns etc were leveraged 30 to 1. When 3% of their risk went 100% bad, they were wiped out, as were stockholders, employees, and bondholders.
Fiat money is created out of thin air. You pay back old debt with newly created inflationary money…OR you just default.
It’s going to get worse, before it gets worse…HLS
ParticipantThe REAL sickness only kicked in about 6 years ago when no down payment AND lying about income and assets was possible..yes,it’s that recent.
In the 1960’s nobody in their right mind had anything other than lower end rentals. “Bread and Butter units” 2BR-1BA maybe 3Br-2Ba, but certainly not high end homes as rentals. It was NOT a major topic of discussion. (Nor was the stock market)
In the late 80’s many houses were available to buy at 100x monthly gross rent. Assumable financing was easily available on many loans. (Take over someone’s existing loan wit almost no qualifying)
Certain areas were always “higher end” with virtually no rentals…
An interesting book is THE COMING REAL ESTATE CRASH by John English & Gray Cardiff,,,written in 1979..
In nominal dollars houses have gone up. In many parts of the country, houses have been a very poor investment. Debt and leverage are key in an inflationary period. Owning property with no debt may not even keep up with inflation in many areas.
Manipulation from the govt and propaganda from the real estate machines have promoted the circus atmosphere.
Bubble markets like SD are the exception, not the rule. Many people got lucky many others haven’t been so lucky.
It’s still possible to buy rental property that makes sense with today’s numbers in almost every state in the nation. Expecting and factoring in ANY appreciation is a huge mistake. It should be a bonus, not an expectation.
Being a landlord isn’t for everybody….
ParticipantThe REAL sickness only kicked in about 6 years ago when no down payment AND lying about income and assets was possible..yes,it’s that recent.
In the 1960’s nobody in their right mind had anything other than lower end rentals. “Bread and Butter units” 2BR-1BA maybe 3Br-2Ba, but certainly not high end homes as rentals. It was NOT a major topic of discussion. (Nor was the stock market)
In the late 80’s many houses were available to buy at 100x monthly gross rent. Assumable financing was easily available on many loans. (Take over someone’s existing loan wit almost no qualifying)
Certain areas were always “higher end” with virtually no rentals…
An interesting book is THE COMING REAL ESTATE CRASH by John English & Gray Cardiff,,,written in 1979..
In nominal dollars houses have gone up. In many parts of the country, houses have been a very poor investment. Debt and leverage are key in an inflationary period. Owning property with no debt may not even keep up with inflation in many areas.
Manipulation from the govt and propaganda from the real estate machines have promoted the circus atmosphere.
Bubble markets like SD are the exception, not the rule. Many people got lucky many others haven’t been so lucky.
It’s still possible to buy rental property that makes sense with today’s numbers in almost every state in the nation. Expecting and factoring in ANY appreciation is a huge mistake. It should be a bonus, not an expectation.
Being a landlord isn’t for everybody….
ParticipantThe REAL sickness only kicked in about 6 years ago when no down payment AND lying about income and assets was possible..yes,it’s that recent.
In the 1960’s nobody in their right mind had anything other than lower end rentals. “Bread and Butter units” 2BR-1BA maybe 3Br-2Ba, but certainly not high end homes as rentals. It was NOT a major topic of discussion. (Nor was the stock market)
In the late 80’s many houses were available to buy at 100x monthly gross rent. Assumable financing was easily available on many loans. (Take over someone’s existing loan wit almost no qualifying)
Certain areas were always “higher end” with virtually no rentals…
An interesting book is THE COMING REAL ESTATE CRASH by John English & Gray Cardiff,,,written in 1979..
In nominal dollars houses have gone up. In many parts of the country, houses have been a very poor investment. Debt and leverage are key in an inflationary period. Owning property with no debt may not even keep up with inflation in many areas.
Manipulation from the govt and propaganda from the real estate machines have promoted the circus atmosphere.
Bubble markets like SD are the exception, not the rule. Many people got lucky many others haven’t been so lucky.
It’s still possible to buy rental property that makes sense with today’s numbers in almost every state in the nation. Expecting and factoring in ANY appreciation is a huge mistake. It should be a bonus, not an expectation.
Being a landlord isn’t for everybody….
ParticipantThe REAL sickness only kicked in about 6 years ago when no down payment AND lying about income and assets was possible..yes,it’s that recent.
In the 1960’s nobody in their right mind had anything other than lower end rentals. “Bread and Butter units” 2BR-1BA maybe 3Br-2Ba, but certainly not high end homes as rentals. It was NOT a major topic of discussion. (Nor was the stock market)
In the late 80’s many houses were available to buy at 100x monthly gross rent. Assumable financing was easily available on many loans. (Take over someone’s existing loan wit almost no qualifying)
Certain areas were always “higher end” with virtually no rentals…
An interesting book is THE COMING REAL ESTATE CRASH by John English & Gray Cardiff,,,written in 1979..
In nominal dollars houses have gone up. In many parts of the country, houses have been a very poor investment. Debt and leverage are key in an inflationary period. Owning property with no debt may not even keep up with inflation in many areas.
Manipulation from the govt and propaganda from the real estate machines have promoted the circus atmosphere.
Bubble markets like SD are the exception, not the rule. Many people got lucky many others haven’t been so lucky.
It’s still possible to buy rental property that makes sense with today’s numbers in almost every state in the nation. Expecting and factoring in ANY appreciation is a huge mistake. It should be a bonus, not an expectation.
Being a landlord isn’t for everybody….
ParticipantThe REAL sickness only kicked in about 6 years ago when no down payment AND lying about income and assets was possible..yes,it’s that recent.
In the 1960’s nobody in their right mind had anything other than lower end rentals. “Bread and Butter units” 2BR-1BA maybe 3Br-2Ba, but certainly not high end homes as rentals. It was NOT a major topic of discussion. (Nor was the stock market)
In the late 80’s many houses were available to buy at 100x monthly gross rent. Assumable financing was easily available on many loans. (Take over someone’s existing loan wit almost no qualifying)
Certain areas were always “higher end” with virtually no rentals…
An interesting book is THE COMING REAL ESTATE CRASH by John English & Gray Cardiff,,,written in 1979..
In nominal dollars houses have gone up. In many parts of the country, houses have been a very poor investment. Debt and leverage are key in an inflationary period. Owning property with no debt may not even keep up with inflation in many areas.
Manipulation from the govt and propaganda from the real estate machines have promoted the circus atmosphere.
Bubble markets like SD are the exception, not the rule. Many people got lucky many others haven’t been so lucky.
It’s still possible to buy rental property that makes sense with today’s numbers in almost every state in the nation. Expecting and factoring in ANY appreciation is a huge mistake. It should be a bonus, not an expectation.
Being a landlord isn’t for everybody….
Participant90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
They can slowly tighten the noose, but it’s not like a few years ago. If you don’t qualify for a 5% prime loan, there is no more subprime market at 7%. You either qualify or you don’t.
Loans arent originated by banks who then go looking for a buyer.
The loans are locked daily and delivered to FNMA asap, who then package them into MBS. Banks don’t originate 30 mtgs and then hope that they can sell them at a profit. Nobody can afford to gamble on rates falling so they can receive a premium. Loan locks are a serious part of the business that people don’t realize.
If a % of locked loans are not delivered, there is a price to pay.The CDO crap that was sold by Wall Street investment banks was not 15/30 YR mortgages to prime borrowers. It was (worthless) subprime ARM crap often rated AAA by ratings agencies who were paid fees to rate the bonds.
The fraud and incompetence at the highest levels resulted in billions of dollars of taxpayer bailout money that rewarded the incompetent who gambled with OPM. People who should be in jail today are collecting fat salaries today with no consequences except to stockholders who have lost large portions of their retirement accounts.Imagine what would happen to the national market if 20% down was the ONLY way to buy a house.
Imagine if 50% down was the ONLY way to buy a house. What if there was no financing available for houses at all ? Prices would be a fraction of what they are today.Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.DW, I don’t recommend auto loans for than a year or two. Save up and pay cash instead of buying now and financing. Drive a clunker with no debt.
Participant90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
They can slowly tighten the noose, but it’s not like a few years ago. If you don’t qualify for a 5% prime loan, there is no more subprime market at 7%. You either qualify or you don’t.
Loans arent originated by banks who then go looking for a buyer.
The loans are locked daily and delivered to FNMA asap, who then package them into MBS. Banks don’t originate 30 mtgs and then hope that they can sell them at a profit. Nobody can afford to gamble on rates falling so they can receive a premium. Loan locks are a serious part of the business that people don’t realize.
If a % of locked loans are not delivered, there is a price to pay.The CDO crap that was sold by Wall Street investment banks was not 15/30 YR mortgages to prime borrowers. It was (worthless) subprime ARM crap often rated AAA by ratings agencies who were paid fees to rate the bonds.
The fraud and incompetence at the highest levels resulted in billions of dollars of taxpayer bailout money that rewarded the incompetent who gambled with OPM. People who should be in jail today are collecting fat salaries today with no consequences except to stockholders who have lost large portions of their retirement accounts.Imagine what would happen to the national market if 20% down was the ONLY way to buy a house.
Imagine if 50% down was the ONLY way to buy a house. What if there was no financing available for houses at all ? Prices would be a fraction of what they are today.Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.DW, I don’t recommend auto loans for than a year or two. Save up and pay cash instead of buying now and financing. Drive a clunker with no debt.
Participant90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
They can slowly tighten the noose, but it’s not like a few years ago. If you don’t qualify for a 5% prime loan, there is no more subprime market at 7%. You either qualify or you don’t.
Loans arent originated by banks who then go looking for a buyer.
The loans are locked daily and delivered to FNMA asap, who then package them into MBS. Banks don’t originate 30 mtgs and then hope that they can sell them at a profit. Nobody can afford to gamble on rates falling so they can receive a premium. Loan locks are a serious part of the business that people don’t realize.
If a % of locked loans are not delivered, there is a price to pay.The CDO crap that was sold by Wall Street investment banks was not 15/30 YR mortgages to prime borrowers. It was (worthless) subprime ARM crap often rated AAA by ratings agencies who were paid fees to rate the bonds.
The fraud and incompetence at the highest levels resulted in billions of dollars of taxpayer bailout money that rewarded the incompetent who gambled with OPM. People who should be in jail today are collecting fat salaries today with no consequences except to stockholders who have lost large portions of their retirement accounts.Imagine what would happen to the national market if 20% down was the ONLY way to buy a house.
Imagine if 50% down was the ONLY way to buy a house. What if there was no financing available for houses at all ? Prices would be a fraction of what they are today.Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.DW, I don’t recommend auto loans for than a year or two. Save up and pay cash instead of buying now and financing. Drive a clunker with no debt.
Participant90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
They can slowly tighten the noose, but it’s not like a few years ago. If you don’t qualify for a 5% prime loan, there is no more subprime market at 7%. You either qualify or you don’t.
Loans arent originated by banks who then go looking for a buyer.
The loans are locked daily and delivered to FNMA asap, who then package them into MBS. Banks don’t originate 30 mtgs and then hope that they can sell them at a profit. Nobody can afford to gamble on rates falling so they can receive a premium. Loan locks are a serious part of the business that people don’t realize.
If a % of locked loans are not delivered, there is a price to pay.The CDO crap that was sold by Wall Street investment banks was not 15/30 YR mortgages to prime borrowers. It was (worthless) subprime ARM crap often rated AAA by ratings agencies who were paid fees to rate the bonds.
The fraud and incompetence at the highest levels resulted in billions of dollars of taxpayer bailout money that rewarded the incompetent who gambled with OPM. People who should be in jail today are collecting fat salaries today with no consequences except to stockholders who have lost large portions of their retirement accounts.Imagine what would happen to the national market if 20% down was the ONLY way to buy a house.
Imagine if 50% down was the ONLY way to buy a house. What if there was no financing available for houses at all ? Prices would be a fraction of what they are today.Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.DW, I don’t recommend auto loans for than a year or two. Save up and pay cash instead of buying now and financing. Drive a clunker with no debt.
Participant90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
They can slowly tighten the noose, but it’s not like a few years ago. If you don’t qualify for a 5% prime loan, there is no more subprime market at 7%. You either qualify or you don’t.
Loans arent originated by banks who then go looking for a buyer.
The loans are locked daily and delivered to FNMA asap, who then package them into MBS. Banks don’t originate 30 mtgs and then hope that they can sell them at a profit. Nobody can afford to gamble on rates falling so they can receive a premium. Loan locks are a serious part of the business that people don’t realize.
If a % of locked loans are not delivered, there is a price to pay.The CDO crap that was sold by Wall Street investment banks was not 15/30 YR mortgages to prime borrowers. It was (worthless) subprime ARM crap often rated AAA by ratings agencies who were paid fees to rate the bonds.
The fraud and incompetence at the highest levels resulted in billions of dollars of taxpayer bailout money that rewarded the incompetent who gambled with OPM. People who should be in jail today are collecting fat salaries today with no consequences except to stockholders who have lost large portions of their retirement accounts.Imagine what would happen to the national market if 20% down was the ONLY way to buy a house.
Imagine if 50% down was the ONLY way to buy a house. What if there was no financing available for houses at all ? Prices would be a fraction of what they are today.Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.DW, I don’t recommend auto loans for than a year or two. Save up and pay cash instead of buying now and financing. Drive a clunker with no debt.
ParticipantNot at all.. do you understand who “LENDERS” are ?? The govt is about the only lender today.
Lenders don’t make their own rules…”Lenders” Don’t make up the guidelines for 15/30 YR mortgages. There are slightly different guidelines for FNMA/FHLMC(Freddie)/FHA but that is how 90%+ of loans are originated today.BANKS ARE MORTGAGE BROKERS..Wolves in sheeps clothing. They don’t have free loans. They don’t have the best rates. Consumers are clueless.
Salespeople sitting at desks telling people what is on their computer screen. Many have crappy credit scores and have never gotten a loan themselves. They originate loans to sell off just like mortgage brokers. A good mortgage broker will make your life easy and get you a great loan, a bad one will screw you even when it’s your friend or relative.When guidelines are met, there is an endless amount of money available. The guidelines are getting tighter and tighter however.
When mortgage insurance is involved on a loan over 80%, the mortgage insurance company guidelines step in added to basic guidelines..,,here is an example.. https://www.ugcorp.com/rates/EligibilityGuidelinesSummary.pdf
FNMA loans need a DU approval from an automated system. Freddie loans are an LP approval.
Many wholesale lenders, banks included, have additional overlays for risk.
Banks don’t lend long and borrow short.
They don’t loan out their money for 30 years at 4.50% and pay depositor 3% for a 5 YR CD. That is suicide.
Mortgage brokers AND banks originate loans that are sold to FNMA etc who then bundles them into MBS (Mortgage Backed Securities) and sells them off with an implied guarantee of safety to “investors”Most people think of a bank as one big happy company. The biggest ones are the biggest problems.
BANKS are (at least) 3 separate entities:
1) The building that you walk into where you make deposits and get screwed on fees
2)A SEPARATE MORTGAGE BROKER division that originates loans to be sold off
3)A SEPARATE division that services the loans that were sold off.All divisions want to make a profit.
Because you started your loan at #1 above which then led to dealing with #2 and now you make payments to #3 doesn’t mean that you are going to get “special” treatment because you have banked with #1 and keep $100K in a CD.I spoke with an auto finance manager the other day with 25 years in his industry. His comment to me was “consumers are stupid”. Most people got screwed if they bought a car during Cash for Clunkers. Prices went up, incentives disappeared, and it now appears that the $4500 is going to be taxed as income.
This is a simple overview of the situation.
Many people just don’t qualify for loans today, period. No such thing as a slam dunk, no brainer loan.Portfolio loans are loans that a bank will keep in their portfolio/on their books. This might be ARMS with short term rates. 5 YR CD deposits means they have some comfort in lending on a 3YR or 5YR ARM.
Banks may make their own decisions on short term funds, but they often use same tight guidelines.The more people think they know, the more dangerous they are..can’t remember who said it first.
Lots more could be written….HLSParticipantNot at all.. do you understand who “LENDERS” are ?? The govt is about the only lender today.
Lenders don’t make their own rules…”Lenders” Don’t make up the guidelines for 15/30 YR mortgages. There are slightly different guidelines for FNMA/FHLMC(Freddie)/FHA but that is how 90%+ of loans are originated today.BANKS ARE MORTGAGE BROKERS..Wolves in sheeps clothing. They don’t have free loans. They don’t have the best rates. Consumers are clueless.
Salespeople sitting at desks telling people what is on their computer screen. Many have crappy credit scores and have never gotten a loan themselves. They originate loans to sell off just like mortgage brokers. A good mortgage broker will make your life easy and get you a great loan, a bad one will screw you even when it’s your friend or relative.When guidelines are met, there is an endless amount of money available. The guidelines are getting tighter and tighter however.
When mortgage insurance is involved on a loan over 80%, the mortgage insurance company guidelines step in added to basic guidelines..,,here is an example.. https://www.ugcorp.com/rates/EligibilityGuidelinesSummary.pdf
FNMA loans need a DU approval from an automated system. Freddie loans are an LP approval.
Many wholesale lenders, banks included, have additional overlays for risk.
Banks don’t lend long and borrow short.
They don’t loan out their money for 30 years at 4.50% and pay depositor 3% for a 5 YR CD. That is suicide.
Mortgage brokers AND banks originate loans that are sold to FNMA etc who then bundles them into MBS (Mortgage Backed Securities) and sells them off with an implied guarantee of safety to “investors”Most people think of a bank as one big happy company. The biggest ones are the biggest problems.
BANKS are (at least) 3 separate entities:
1) The building that you walk into where you make deposits and get screwed on fees
2)A SEPARATE MORTGAGE BROKER division that originates loans to be sold off
3)A SEPARATE division that services the loans that were sold off.All divisions want to make a profit.
Because you started your loan at #1 above which then led to dealing with #2 and now you make payments to #3 doesn’t mean that you are going to get “special” treatment because you have banked with #1 and keep $100K in a CD.I spoke with an auto finance manager the other day with 25 years in his industry. His comment to me was “consumers are stupid”. Most people got screwed if they bought a car during Cash for Clunkers. Prices went up, incentives disappeared, and it now appears that the $4500 is going to be taxed as income.
This is a simple overview of the situation.
Many people just don’t qualify for loans today, period. No such thing as a slam dunk, no brainer loan.Portfolio loans are loans that a bank will keep in their portfolio/on their books. This might be ARMS with short term rates. 5 YR CD deposits means they have some comfort in lending on a 3YR or 5YR ARM.
Banks may make their own decisions on short term funds, but they often use same tight guidelines.The more people think they know, the more dangerous they are..can’t remember who said it first.
Lots more could be written….HLSParticipantNot at all.. do you understand who “LENDERS” are ?? The govt is about the only lender today.
Lenders don’t make their own rules…”Lenders” Don’t make up the guidelines for 15/30 YR mortgages. There are slightly different guidelines for FNMA/FHLMC(Freddie)/FHA but that is how 90%+ of loans are originated today.BANKS ARE MORTGAGE BROKERS..Wolves in sheeps clothing. They don’t have free loans. They don’t have the best rates. Consumers are clueless.
Salespeople sitting at desks telling people what is on their computer screen. Many have crappy credit scores and have never gotten a loan themselves. They originate loans to sell off just like mortgage brokers. A good mortgage broker will make your life easy and get you a great loan, a bad one will screw you even when it’s your friend or relative.When guidelines are met, there is an endless amount of money available. The guidelines are getting tighter and tighter however.
When mortgage insurance is involved on a loan over 80%, the mortgage insurance company guidelines step in added to basic guidelines..,,here is an example.. https://www.ugcorp.com/rates/EligibilityGuidelinesSummary.pdf
FNMA loans need a DU approval from an automated system. Freddie loans are an LP approval.
Many wholesale lenders, banks included, have additional overlays for risk.
Banks don’t lend long and borrow short.
They don’t loan out their money for 30 years at 4.50% and pay depositor 3% for a 5 YR CD. That is suicide.
Mortgage brokers AND banks originate loans that are sold to FNMA etc who then bundles them into MBS (Mortgage Backed Securities) and sells them off with an implied guarantee of safety to “investors”Most people think of a bank as one big happy company. The biggest ones are the biggest problems.
BANKS are (at least) 3 separate entities:
1) The building that you walk into where you make deposits and get screwed on fees
2)A SEPARATE MORTGAGE BROKER division that originates loans to be sold off
3)A SEPARATE division that services the loans that were sold off.All divisions want to make a profit.
Because you started your loan at #1 above which then led to dealing with #2 and now you make payments to #3 doesn’t mean that you are going to get “special” treatment because you have banked with #1 and keep $100K in a CD.I spoke with an auto finance manager the other day with 25 years in his industry. His comment to me was “consumers are stupid”. Most people got screwed if they bought a car during Cash for Clunkers. Prices went up, incentives disappeared, and it now appears that the $4500 is going to be taxed as income.
This is a simple overview of the situation.
Many people just don’t qualify for loans today, period. No such thing as a slam dunk, no brainer loan.Portfolio loans are loans that a bank will keep in their portfolio/on their books. This might be ARMS with short term rates. 5 YR CD deposits means they have some comfort in lending on a 3YR or 5YR ARM.
Banks may make their own decisions on short term funds, but they often use same tight guidelines.The more people think they know, the more dangerous they are..can’t remember who said it first.
Lots more could be written….HLS -
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