Thinking of a change in the economy, think again.

Just informing some people on how the economy is heading in the near future, with my current profession being a mortgage broker.

If any of you guys ever get the chance watch the Mr.Mortgage videos on youtube, which I will link up here in another post. He gives great insight on products that big time investors used to offer which are similar to sub-prime loans.

These loan products were called ALT-A products  which were for mid-tier credit people to good credit people. All being along the same lines as sub-prime loans, with the teaser rates of arms. One of the main differences were that the arms, were a little bit longer maybe for 5 years or 7 years, but still many were 2-3 years arms also. With the declining values of homes, the main torture of the economy, which has caused millions of sub primes loans to go bad, the ALT-A products are going to be the next to come due. This is going to be the Alt-A crisis now. No values, equals upside down people in the same boat as sub-prime people. In the video you will see that their are millions of these ALT-A loans that still need to come due. With millions of investors having  these loans still stacked in their books, a positive economy turn around looks no where to be seen in the near future. The video will explain a company called Aurora which was a Lehman investor. I use to use this company and the loan products they were offering were just insane. I could get anyone approved with their services.

This ALT-A crisis, doesn't even include the people in pay-option arms which are still being used to this day. These loans offer a low rate were you don't have to pay the full balance of interest nor principal. The remaining balance each month gets tacked on to your overall loan balance. Now just imagine someone upside down and increasing their overall balance each month. I know Wachovia is still training people to this day to sell these types of loans. The investor gives 2 and a half % in the back that the customer never sees on these loans. So all the LO's are making a killing of selling these loans. I personally have never sold these loans, but talk to people everyday who are now stuck in them. It is OK if the client knows how to use the loan properly, but in most cases the client is completely blind to what is going on.

ALT-A is still around, but the guidelines have changed a great deal. With all these loans coming due here in the near future, our economy is not looking so bright anytime soon. Kinda scary actually.

Link to Mr. Mortgage discussion on Aurora ALT-A programs.

The amount of these loans to come due, is plain and simple, fucking scary for our future economy. The amount of these loans due is almost the same as the sub-prime phase we already went through, if not more. Not trying to be a downer here, but just trying to foreshadow the future for some of my covers investors. And of course everyone knows that our whole economy is pretty much based on the housing market.


The thing that pisses me off the most is the former CEO of Countrywide. This fucker made 66 million dollars a year, as the stock price went down 9 dollars a share. Now this box makes another new company to help out people in bad loans, from all the damn money he got from Countrywide. Corporate pricks get away with everything.

Great vid. on the statistics of future foreclosures with ALT-A.


Meant to show this vid. first. This is a definite much watch video.

Mr.Mortgage on CNN.

Only time will tell.

FNM

US Govt raising loan limits for Fannie and Freddie

bailouts for overleveraged homeowners who didnt read loan docs

this may put our economy in the shitter but the market has to work itself out on this one...or there can only be private voluntary renegotiation of loan terms

you know that when the Fed starts trading T bills for mortgage debt, our worthless dollar will be even more worthless b/c people decided they would rather get foreclosed on than pay a mortgage on a house that has greater than 100% LTV

Koaj,

The Us Government raising loan limits, is the only way people would be able to purchase a jumbo loan now in days. These loans are legit too, because they have to be full-doc. Meaning that the client can afford the monthly payment and also will get a 30 yr fixed. I am currently in the FHA sector of mortgages now and this is the only product program that is currently helping borrowers out of trouble, either conforming or non-conforming loans. FHA is trying to correct the market and is really the only program out for jumbo products right now. With out them raising the limits, all houses will just sit and rot if above 417k. It is still hard to qualify these people still, now with the FHA limits raised to 729k in my area, some homes are finally being purchased fare and square. Thus in returning bringing back some values to the neighborhood. Even though they most likely purchased a short sale or a foreclosure. It still  is a turn in the positive direction not in the direction.

is the only way people would be able to purchase a jumbo loan now in days.
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well maybe unless you have 20% down and a good job you shouldnt be buying a house in need of a jumbo loan

i hate that the government is backing loans for overpriced mcmansions

Koaj,

I completely agree with what you are saying, but you got to think rate wise. A regular jumbo loan product with WellsFargo today was at 8.125% at par. Now imagine what kind of monthly payment you would have at that interest rate, with a big ass loan amount. The going rate on a FHA jumbo loan today is at 6% with Wells Fargo. Even if you put down 20% you still have to pick between 8.125% or 6%, now which one would you choose? Their is more behind the scenes that people don't know about and I wouldn't expect you to know about. Also your 20% down would really need to be 25%, because if you are in a declining market area they cut another additional 5% off the LTV. FHA is the future to get things back on track for right now. It was awhile back and now is coming back full swing. Who else is there to help people out besides the government? It's not like they are giving loans for millions and millions of dollars like alot of investors did in the past for nothing. FHA is full doc and has many other strict guidelines to make sure the loans work and continue to work in the long run. Can't beat a 30 yr fixed rate at 6% on jumbo loan. FHA is the only thing making this  housing market stay afloat right now.

Word!

scary that this is going on during an election year and you can see both the left and right pandering like a bunch of idiots

some GOP congressman wants to give 10k to people who buy a house. what about people who already own? what about renter waiting for the crash? it boggles my mind that the GOP has any representative that believes the govt should be subsidizing home ownership. he should have his party rights revoked

asshole

fuck em all...seriously. ive been waiting patiently for 2+ years hoarding cash waiting to pounce on someone else's stupidity.

home prices  

Doesn't the government already subsidize home ownership with the mortgage interest and real estate tax deductions?  The law already disfavors the renter.

d2 - i dont know if you can say if that is a subsidy or not. thats like saying the govt is subsidizing small businesses by allowing them to deduct health care expenses off their gross income