I am looking at headlines saying "stocks tumble on subprime woes." This a.m., there was an NPR talk show, Diane Rehm, on the subprime issues. If you have a chance, listen to it on line. It was a good, well-balanced panel.
One of the things I heard was that in 2005-2006, subprime lending added a little over 2% to the total homeownership market in the U.S. Predictions are that as many as half of those loans will be foreclosed. That means, according to this commentator (link above to the show), that homeownership will have improved by 1% as a result of the subprime lending.
What I take from this is that subprime lending was a good thing for the housing market, and still is, but that it may be a rotten thing for those mortgage investors who made risky loans. And that while those mortgage lenders may be suffering the consequences, that wise investors will continue to loan to the other 98% of people who want to own a home.
So, any of your mortgage types on Active Rain want to weigh in on this?
Meanwhile, Flagstaff real estate is still ticking along just fine. Thanks.
Ann,
Good or bad, we are in a market where, even if you wanted to offer a B/C loan, there is nothing available, this market is for Fannie Mae, or FHA only, Full Doc Owner Occupied...
Tom Weiss
We're in a correcting market and I for one think it's a good thing. There's still a lot of business to be captured out there it just takes a little extra hard work.
Now guidelines and pricing is changing constantly, products are being pulled... The old adage, "Cash Is King" is going to reign true for some time. The best products are going to go to those buyers with a down payment and the refinances to those with a strong credit and financial background; and they're out there.
So enough complaining about how business is tough or how business is slow. Do your job, alert yourself to the changes in the industry. Learn the new product changes, get your clients and fund some deals. Like Nike says, "Just Do It!" Yes the market is changing, but it's also for the best.
Ricardo -- you're absolutely right = JUST DO IT.
Those percentages seem a bit exaggerated. The prediction of 50% of sub-prime borrowers defaulting sounds high.
Nonetheless, there are plenty of great borrowers out there. I spoke to a new one just today!
I agree most of this is just an over exaggerated. It was made for news broadcasts and most foreclosures aren't because of the loans themselves. Most are due to job loss, death and injury, none of those last I checked are due to subprime loan.
Ann, sub-prime still exists. Different lenders call it different things but what ever they call it if they make loans to people with FICOs under 660 they are in the sub-prime arena.
The biggest difference is the loss of most of the 100% products.
A sub-prime borrower with 20% cash down shouldn't have too much difficulty finding financing. If it's here in California I know I can probably do the deal.
Bill Roberts
The media won't listen to us though, unless it makes a great fear factor headline! They wait for the damn to break before reporting about the problem with the damn.
Todd -- I think you meant "dam" -- but otherwise you are right!