The era of cheap money is over (news item)

[javaguru]

yep. to consumers, this is also known as the secondary market.

their mortgage is sold all over the place. the system breaks down if the bottom of the totem pole doesn't make their mortgage payment.

unf. lenders have been greedy and handing out mortgages to everyone; even if their chances of become mr deadbeat foreclosure is pretty high.

don't worry - uncle sam will bail out these lenders just like the bailed out airlines after 9/11.

and the saving and loans in the 1980's....otherwise it would destroy the economy.

 

[dead_reggin_storage_fashi]

yep. to consumers, this is also known as the secondary market.

their mortgage is sold all over the place. the system breaks down if the bottom of the totem pole doesn't make their mortgage payment.

unf. lenders have been greedy and handing out mortgages to everyone; even if their chances of become mr deadbeat foreclosure is pretty high.

don't worry - uncle sam will bail out these lenders just like the bailed out airlines after 9/11.

with the sub prime hit


the bigger banks will just get bigger. The biggest sub prime lenders who survived will get stronger and stronger as less comp out there. Yes they did have cut backs but the main thing is less lenders to compete against so who are the sub prime borrowers going to go to now? The ones who did survive like WF C.F.C. WaMu (all do A paper and sub prime) etc will even be stronger as fewer sub prime shops are open for business.

yes guidelines are a bit tigher forever prob. on out but always borrowers out there and there will always be no ratio loans and stated income etc out
there.

their will be more and more FHA loans now as they can lend up with a down payment as little as 2.25 % (FHA loans ang guidelines vary from country from county etc but they will be huge mainly because with an FHA loan your credit scores dont matter.

yes people will mail back their keys to the banks but the foreclosures going on over the next few years will be so spread out it will really not effect much..



yes it wont do much but make the underwriting guidelines a bit more tight...overall the foreclosures will not have an overall effect on the economy. just it will be spread so far out over the next few years


rates could be in the 7s soon but when you get to the core of things the average borrwer is in too big of a mortgage for the most part and also spends to much and doesnt save enough. Yes rates are important but a 6.5% vs 7.325% doesnt matter when someone has 20k in rev. debt

 

[5x10]

i work as a subprime account exec for one of the large banks
i think because of the sheer volume of loans that have been issued in the last 3 yrs, most of which are arms, we wont see the bottom of the mkt for another year at least

inflation is starting to come on strong now
costs of food is on the rise as is gas

i think the banks holding these loan on the balance sheets might not all survive

someone has to pay for all the liquidity that has been pumped into the system for the last 5 yrs

its going to be interesting to see what happens

 

[Jimsbbc]

We are already headed into a recession, and I am seeing stagflation in the interim as a very real possibility. Don't believe what uncle Ben is reporting on consumer spending. Look at what the retailers are reporting instead. The hand of the Fed is already tied. They will miss the opportunity to lower the FFR in time to pull us out of the coming rut because they are holding back the crazy speculation and leveraged buyouts.

The end game will be a deflationary recession that will eat up the credit created during the expansion period of the last 5 years. The rising defaults and resulting credit destruction in the subprime sector will spill into the prime lending sector as well. This one will hit America hard since most consumers have been financially irresponsible by using their houses as an ATM, saving little if anything at all, overstretching to get to that next tier up.

Make sure you are highly liquid if you are not already.

 

[Spartacus]

I got a locked rate on my mortgage.

me too at 5.25 with 10 years left
the majority of my payment goes towards principle

 

[ortiz34]

The Northeast has been in a recession for a couple of years now