2008-11-20 — ml-implode.com
"I have been telling all of you for a long time that they will have to modify every loan in America in order to fix this problem, but I never dreamed they would do it this way. Reworking loans to make ‘payments affordable’ without permanently reducing principal balances is the worst possible thing that can be done because it ensures the housing and foreclosure crisis will be with us for a long time. If these programs are widely accepted, housing is a dead asset class indefinitely."
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thetruthfromNC at 06:15 2008-11-20 said:
People who keep saying that fraud is the cause of the current mortgage crisis, just doesn't know what they're talking about. A subprime lender (by the way I'm not) who offers a 2/28 and not an FHA loan is not committing fraud when he's not an FHA approved broker. That would be the same as charging every salesman at GM for fraud because he didn't offer his customer a Honda. You can't sell what you don't have and most sumprime brokers didn't have FHA. I actually wrote my congresswomen and senator back in early 2007 that the only way to correct the sumprime mess was to require a denial from an FHA lender before a subprime loan could be closed. Of course I got no response. For example a friend of mine who did subprime gave me 4 loans ranging from 9.5 to 11.5% ARM's when his company went belly up. I closed 3 of them at 6.5% FHA fixed rates and the 4th just needed to keep renting. Permalinkluke at 16:42 2008-11-22 said:
"The risk is billed into the rate". Therein lies the problem. Yes, it's harder to sell a risky loan with a lowered return and a greater chance of default so let's remove the risk. Ok, so the credit's bad. Qualify the borrower at the Fully Indexed rate, not the teaser and eliminate rolling all upfront closing costs into the loan. I know people who are pretty bad at paying their bills but they do always make the rent. If one has more of a vested interest in the home, rather than the song and dance of future equity, they are more opt to protect their investment. Lose the SISA and NINA programs and get back to old school lending. Here is my paystub/tax return and bank statements. Here are a list of all my debts. Here is a 24 month VOR. Get rid of Yield Spread Premiums completely. The broker keeps the upfront fees that are paid IN CASH, the lender gets the interest. Don't have 20% down? Come back when you do! Permalinkadd a comment | go to forum thread
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