The Mortgage Lender Implode-O-Meter

[bdc63]

Shelly wrote" Why on earth would the Fed consider lowering rates when everything is going along just swell? If they do, they must know of some type of economic problem they haven't been telling us about."


What about the war and the machine to keep our country safe?

I suspect that Shelly was taking the other side of the arguement to make a point.


I really do wonder what the Fed's next move will be though. Like Shelly, I believe the logical move would be up ... that is if the Fed is interested in propping up the precarious dollar and keeping China interested in buying our debt. Yes, it will create difficult times that American's aren't used to, but to use Goofer44's words, maybe it's the bitter medicine we need. And, the Dem's have had control of congress long enough now that Bush should be able to figure out a way to blame it all on them .

But, the Fed has shown time and time again that the only number they care about is GDP (they pretend to care about inflation, but anyone that has been to the grocery store lately knows the reported number has no basis in reality). So, if GDP starts to show recession (I believe that it already has, based on the "import/export" component of the last GDP#, but that discussion is for another time), will the Fed cut, dollar be damned? And, if the dollar devalues, causing China to stop buying our debt, under the umbrella of a sliding GDP (ie. lower revenues), is America even capable of servicing its debt, let alone funding all the other crap?

I know that the Fed has shown great capacity to blow bubble after bubble in the past, but this time it would appear that the stakes are higher. I don't see how they could possibly lower rates -- and if they do, I'm taking every penny I have and putting it into Euro's and gold.

I would be very interested in hearing other views on this.

 

[Mango]

Mango - Thanks for your insider insights. I agree with your tip-of-the-iceburg analysis ... and I fear that a titanic sized ship with the words "US Economy" painted on the side is headed right for it.

I am curious what, if any, lending tightening standards that you are seeing outside of the subprime arena. I read on another site that Neg ARMS and No Doc's are gone, regardless of credit score. That doesn't seem to be true, as I still see them advertised. What are you seeing?

I also read a prediction that by year end the only loans available will be 30 year fixed with 20% down to people with high credit scores. If true, that would certainly change the affordablity position of most folks (and may be what brings the "median home" price back within reach of the "median family"). Any thoughts?

(Implode-O-Meter update: 20, or about 2 per week since the first collapse in early DEC)

and I heard a prediction that Aliens from the planet Rylos will descend upon the planet and reveal that they gave Nintendo the technology for the Wii so they could train and recruit young people to fight in their desperate interplanetary battle for freedom.

bdc, mortgage products will not disappear, and we won't revert to the depression era where folks had to put 50% down and only could get a 5 yr mortgage, there will just be more disclosures regarding an adjustable rate loans offered. Also, appraisals are being scrutinized more- some Banks in lieu of underwriters reviewing them are giving them to review appraisers.

What you're seeing is an over reaction to The Office of the Comptroller and other federal bank regulators issued new guidelines late last month directing banks to tighten underwriting and disclosure standards for nontraditional mortgages. The guidelines instruct banks to use the fully indexed rate when analyzing a borrower?s ability to repay interest-only mortgages and payment-option, negative-amortization loans.
Additionally, the Division of Banks also released proposed guidance on non-traditional mortgage product risks, intended to apply to licensed mortgage brokers and lenders paralleling recently issued federal guidance for banks and credit unions on the risks of non-traditional mortgage products, such as interest-only loans. The guide states that brokers who offer non-traditional mortgage products must clearly disclose the risks that borrowers may assume. Many borrowers of these non-traditional products have found themselves in trouble.

So from now on in addition to what we have already been doing, we will be giving out a disclosure something like this:
If you take an adjustable rate mortgage and rates go up, your rate will go up, if rates go down, your rate will go up. Please sign here 10 times. :rofl:
But you will always see an array of products available to consumers.

 

[bdc63]

Mango - thanks for you insights and humor ... both are appreciated

 

[Bob]

When I look at Bernanke's resume, I am relatively calmed by his obvious intellectual background. When I consider the fiscal corner Ben is being backed into by the actions Of GW and Greenspan, and our inability to influence trickle down OPEC inflation, I see no good outcome. Bernanke may be subject to the same misplaced vitriol that Jimmy Carter suffered through, because he recommended we simultaneously be fiscally responsible and independent of foreign oil 30 years ago. This was just about the same time blue collar folks started to declare they were Republicans, and The Gipper showed us the miracle of deficit spending combined with unregulated banking. We been moving steadily toward a financial day of reckoning. All we need is 3 aircraft carriers in the Persian Gulf, a nice 'crisis' and the dominoes start falling.

 

[redfisher]

When I look at Bernanke's resume, I am relatively calmed by his obvious intellectual background. When I consider the fiscal corner Ben is being backed into by the actions Of GW and Greenspan, and our inability to influence trickle down OPEC inflation, I see no good outcome. Bernanke may be subject to the same misplaced vitriol that Jimmy Carter suffered through, because he recommended we simultaneously be fiscally responsible and independent of foreign oil 30 years ago. This was just about the same time blue collar folks started to declare they were Republicans, and The Gipper showed us the miracle of deficit spending combined with unregulated banking. We been moving steadily toward a financial day of reckoning. All we need is 3 aircraft carriers in the Persian Gulf, a nice 'crisis' and the dominoes start falling.

Just like $100/oil and the deficit?...

 

[redfisher]

Oh I forgot, what was that stock market message again?...

I love these imminent economic meltdowns!...

 

[Bob]

Just like $100/oil and the deficit?...

Yeah, T. Boone Pickens is an idiot too with his mutant son, Jim Cramer. They're calling for oil to be 100+ range.

 

[Bob]

Oh I forgot, what was that stock market message again?...

I love these imminent economic meltdowns!...

The lemmings ran from real estate to Wall street. What's next?

 

[SHELLY]

The lemmings ran from real estate to Wall street. What's next?

I think you've got that backwards.

My guess is Private Equity/Hedge Fund IPOs....these guys are itching to cash in some chips and the masses are just about ready to throw their money at the "next big thing."

 

[goofer]

SHELLY

Again I agree with you !! This is scary. I totally agree the masses will run after hedge fund and private equity ipo's. And the masses will lose their asses !!