beallsy

2 Comments

    • Wall Street Does Not Bear Sole Responsibility For Subprime Crisis [view article]
      I have read you comment and some is accurate.

      I know quite a few realtors that have been in the business for over 20 years and warned their clients in 2004 and 2005 that the market would hit it's peak then tank big time. It is a cyclic market.
      The only consistency of the market is that it is up and down.

      Consumers started running scared when the market was increasing at such a rapid rate, and feared they would be priced out of the market if they didn't buy something fast.

      Then came the predator lenders.
      Do you know the 5 year history of the LIBOR?
      I bet not.
      Should a new homeowner be expected to know?
      I have asked to friends that have made millions in the stock market and they didn't even know what the LIBOR was.

      This cruel attitude that these lenders have and are passing on to the public no affected by these ARM resets is, "you should have read the paperwork - we got ya, and you are responsible for that, so pay up".

      Doesn't this say it all?

      What is the purpose of a mortgage broker if they don't bother to education the consumer about the loan programs they are getting paid to originate?

      Did you know that the LIBOR was at an all time low in 2004 and averaged 1.4% for the year. Resulting in lenders telling the borrowers that their payment would most likely come down when it adjusted.
      The norm is over 4.8%.
      Are you aware that the lenders didn't provide to the borrower's the 5 year history of the index their rate was tied to as required under TILA?

      Did you also know that the lenders pool loans, get mortgage insurance on all the loans in the pool and then sell them to investors. When a loan defaults they are reimbursed up to 35% of the original loan balance to include all losses, even back interest.
      I am not referring to PMI that a homeowner gets when putting less than 20% down. I am talking about something entirely different which very few people are aware of.

      This is why they have no incentive to modify loans or work with borrowers to prevent them from losing their homes. And when they claim they are losing money they are telling a big fib.
      Then they try and sue the homeowner for the difference of what was owed and what the property was sold for at auction.
      A loss they never incurred.

      Here is a little industry secret: The good houses coming up for foreclosure are grabbed up by the banks buddies. They call their buddies when a loan is starting to defaut to head them off so they can check out the property. Then they tell them what they can get it for. This has been going on for over 30 years.

      The old saying is so true, "the man with the gold makes the rules".

      How sad that peoples homes have become hedge funds.





      Oct 24 03:47 PM
    • NAR on "Temporary" Housing Problems [view article]
      Dave,
      I am also a realtor going on 31 years. I have never seen a market like this. And NAR stats are wrong. I showed 5 houses today and 4 of them were short sales. It is heart breaking to observe this.

      I started advising my clients in 2005 to refrain from buying. The market, as you know, is cyclic. Proven and can't be disputed.

      What I am having a hard time understanding is why these mortgage companies are willing to modify interest rates. I know people who were in 3/1 ARMS, always made their payments on time over 36 months and are now faceing 50% payment increases.

      They can't refi out of them because they are upside down or their LTV is to high. Their only choice is to walk.

      I have researched this issue for over 3 months. Unfortunatley I have a lot of time on my hands. This is what I have found out:

      AHM for example:
      Loans originated - securitized in pools, mortgage back securities.
      Sold for 110%, or higher - YSP that was paid to the broker is added in prior sale - all loan pools have Mortgage insurance, MI - they are covered up to 35% of the original balance on each loan - value added result credit enhancement -

      Loans default, 90 days - AHM buys back at what is called the Hair cut price (big discount) - forecloses on loan - MI company reimburses them up to 35% of original loan balance for losses.
      They are guaranteed back interest, even the 90 days worth the invester lost - they get reimbursed all payments while house is empty while chargeing over 8.5%.

      MI companies require reports sent to them stating borrowers efforts, intentions, etc. Mortgage company protrays borrower in the light of not wanting to make payments, not wanting to maintain loan and keep their property, etc. NO ONE sees these reports except the foreclosure dept. of the mortgage company and the MI company. MI company has to approve foreclosure prior to its onset, and is based on the reports.

      Most MI companies insist on favorable workouts for the borrower prior to approval of claim. Most lenders will not comply because it isn't as profitable to them as a foreclosure.

      AHM, for example, promised the investors that they would do a 90 day work out with their borrowers in default to avoid foreclosure.
      Here is an example of their workout.
      $4500- new payment borrower cannot make - increased from $3000-. They offer to split the payment up by 3 parts and add 1/3 to the next 3 months. So the next three payments will be $6000- and credit still dinged every month.
      An impossible situation for a borrower of which they are aware.
      They report to the MI company that the borrower is being uncooperative with their proposed workout.

      All they have to is modify rates to market rates and stop this whole mess. And they won't because of promises they made to their investors. And they restrict the borrowers access to the investor of their loan, and will not disclose the MI company prohibiting the borrower the opportunity to work with them directly. And the policys written on the pools do not itemize the individual loans, so it is impossible for borrowers to find out if their loan is insured because only the pool amount and name is listed.
      The MI companies want to speak with borrowers - I have called quit of few of them.

      Sadly, everyone looses except the mortgage company. The investors lose and the borrowers lose. And they lose a lot.

      Triad, MGIC, etc. are all taking hits because of this, and their investors are losing their shirts, resuting in class actions coming down the pike against some of the MI companies on behalf of their investors.

      Thank heavens that I have always worked with reputable mortgage bankers and brokers. My clients have avoided this mess.

      Now employees of AHM are coming out exposing the cutting and pasteing of loan documents that occurred so the loans could be insured, creating value and sold with credit enhancements.

      This will all be coming out soon - Bernanke is finally getting a clue, dahhh -

      What a mess - and guess who wins again??       Sep 30 09:52 PM
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