Tuesday, October 2, 2007

100% Home Purchase after 04 can't refinance!

Thousands of prime full doc homeowners are shocked/angry to discover that they can't refinance under any terms. Washington Mutual, Bank of America, Indymac, etc don't allow above a 95% Loan to Value on jumbo loans after losing their shirts on risky loans in the last few years. Many people are coming out of adjustables or want a better fixed rate. These aren't risky cashout, stated deals. This is bread and butter lending. The banks and Wall St based money sources have completely pulled back on risk and this is terrible for client's trying to refinance anything above a conforming loan limit, (417k for a single family home.) The biggest problem is values in bubble market have collapsed back to 2004 or 05. These homeowners don't have equity and their loans are adjusting. This is the tip of the iceberg of the housing meltdown. The entire lending industry better get the math wizards in a room and whip up some products to do these loans otherwise you haven't even seen round 1 of this housing meltdown.


russdog777 said...

eyah.. um..

that's what is supposed to happen.

People who couldn't afford those houses int he first place loose them to foreclosure, speculators loose money (lenders) and go out of business.

Inventory goes onto the market at lower prices and people can afford houses again without all the bullshit mortgagee broker-inspired crazy loan products.

And bankers don't take those crazy risks, as you have noticed they aren't eager to do anymore.

meltdown is good. with lower prices we don't ahve to work insane hours just to pay the mortgage. Maybe the wife can take some years off of work to care for the little kids... maybe even some more money left over for health care. The young 20-somethings might even be able to buy their first houses again without resorting to the creative financing.

And we're not debt slaves.

And screw the banks who started this bubble. Let them eat cake. What's needed is a relaxing of bankruptcy laws so that the people involved cn declare bankruptcy and then move on with their lives. the economy won't seize up once it's clear who is going to eat the losses.
what does hurt the economy is the diversion of so much productive activity into trying to support these insanely high RE prices, and getting working families to keep making payments on high levels of household debt.
Flush that debt away if you are so far underwater on a ridiculously overpriced house. You heard Jim Cramer's same advice? Just walk away. You're only a loser if you keep making huge interest pyments on a rapidly depreciating asset.


Jay said...

This is just another example why he housing market is in crisis. The most logical solution for many people is to refinance their homes just to find out that thet cannot even do that. I hope that states and the feds start regulating lenders to prevent this from happening again.