Government intervention (foreclosures, leasing, second mortgage)
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yes, this has been on the net all day; it will be interesting. Part of our financual problems right now (a good part) have to do with loans that should never have been made and inflated property values in some state, particularly Ca and Fl. My brothers live in a 1100 sq ft home, in Simi Valley Ca, 1 bath, no central air, no dining room but it does have a corner lot that is well landscaped because he is a senior gardener for the city of Los Angeles: 2 years ago, his home was valued at about 750,000.00. I am serious....Now, it is more like $250 which is still a total joke.
Interesting. I wonder what that's going to do to all the companies selling REO properties.
I would guestimate that slightly less than a third of the mortgages I'm closing now are REO's and I hear local business leaders speculate foreclosures will continue to rise thru next spring before falling off noticeably. Major lenders have tightened requirements enough to stop a lot of the bailers (people getting a mortgage for a second home on a governemnt loan with the pretense of leasing the first home out, then walking away and sticking the lender with a property worth less than the balance owed, which, for those who don't follow housing trends, is one of the major causes of the crisis we are in). Too many legitimate credit companies have already fallen off (GMAC the most recent), or will with the government putting more money into Fannie & Freddie, as Fannie & Freddie will be trying to shore up making it harder for the mortgage lenders to sell to them. Gonna be a real roller coaster in the stock market Monday I'm guessing.
Right after I bought my place, before I'd even made my first mortgage payment, I got a letter from a major bank saying I'd been pre-approved for a loan of 471K! First of all, there aren't even any houses in this particular town that cost that much. Secondly, I wonder how they thought I'd make the payments, since my sole income is social security. Third, my credit score is only so-so, because of so many inquiries, not because of defaults or failure to pay anything.
I wonder if they have some kind of inside knowlege that I'm in line for the Publisher's Clearing House sweepstakes. Maybe I should start entering it again. 8-)
Right after I bought my place, before I'd even made my first mortgage payment, I got a letter from a major bank saying I'd been pre-approved for a loan of 471K! First of all, there aren't even any houses in this particular town that cost that much. Secondly, I wonder how they thought I'd make the payments, since my sole income is social security. Third, my credit score is only so-so, because of so many inquiries, not because of defaults or failure to pay anything.
I wonder if they have some kind of inside knowlege that I'm in line for the Publisher's Clearing House sweepstakes. Maybe I should start entering it again. 8-)
you know I have to laugh about that so-so because of inquiries: we did have a very good rating, but the one thing that held us back a little was exactly that. At our age and already holding enough Credit cards we should have no inquiries, but when those companies send us letters, like the one you are referring to, that have inquired, thus we end up with "too many inquiries" What a joke. Our oldest daughter is lucky enough to make a very good living: she and her husband use 2 credit cards (both give them extra points and are paid off monthly) other than car purchases every few years they never have a reason to apply for any credit (this wasn't always their case btw) they too have found, the only black mark "too many inquiries" this really sucks...
I know Nita, my son did the same thing, I could have killed him! I helped him buy a house several years ago with no money down, with the plan to refinance within 7 years to a fixed rate mortgage. It was well within his budget, but they we just starting out and didn't have any money to put down. Had he stuck with the plan he was fine, but along came a company (who shall remain nameless but is in the news all the time) offering him an equity loan (hello, he put no money down so he didn't have any equity!) saying their house was worth way more than they bought it for. So without asking advice he takes it. So now, along with how many others, he owes twice as much on his house than it is worth, didn't read the fine print and is only paying interest on the second mortgage, opened all kinds of new credit after using the equity line to pay off old.......what a nightmare...and there is absolutly nothing I can to to help him get out of the mess they created...
I know Nita, my son did the same thing, I could have killed him! I helped him buy a house several years ago with no money down, with the plan to refinance within 7 years to a fixed rate mortgage. It was well within his budget, but they we just starting out and didn't have any money to put down. Had he stuck with the plan he was fine, but along came a company (who shall remain nameless but is in the news all the time) offering him an equity loan (hello, he put no money down so he didn't have any equity!) saying their house was worth way more than they bought it for. So without asking advice he takes it. So now, along with how many others, he owes twice as much on his house than it is worth, didn't read the fine print and is only paying interest on the second mortgage, opened all kinds of new credit after using the equity line to pay off old.......what a nightmare...and there is absolutly nothing I can to to help him get out of the mess they created...
I haven't asked my brother, but my gut feeling is, he has re-financed more than once and he is not a kid. Not long before he wants to retire, let's hope his house is worth more than he owes by then...It is scary, I am so thankful we never fell for anything like this. People blame our government and I am not getting involved in R versus D right now, this is not the fault of the administration, but the fault of greedy lenders and niave borrowers.
you know I have to laugh about that so-so because of inquiries: we did have a very good rating, but the one thing that held us back a little was exactly that. At our age and already holding enough Credit cards we should have no inquiries, but when those companies send us letters, like the one you are referring to, that have inquired, thus we end up with "too many inquiries" What a joke. Our oldest daughter is lucky enough to make a very good living: she and her husband use 2 credit cards (both give them extra points and are paid off monthly) other than car purchases every few years they never have a reason to apply for any credit (this wasn't always their case btw) they too have found, the only black mark "too many inquiries" this really sucks...
Nita
You can request that no inquiries be accepted without your specific authorization, but all they do is put a note in your file. I have a slew of credit cards [long story which I won't go into here] but I keep them paid down, never miss payments of more than the interest, and so on. Most of them turn around and lower my interest rates and/or raise my limits, except one. That one raised my interest from 17.99 to 26.99. I immediately called and asked why, and they said it was because of my credit report. I said 'Have I ever missed a payment? Have I ever made a late payment? Doesn't that count for anything?' Lady I was talking to said no, it was based on information from credit reports. So I said once it's paid off completely, you've lost me as a customer. If I ever use it again, it will be paid in full on time, and you'll get no interest.
As for those 'you've been pre-approved' letters, in the finest possible print at the bottom, there are directions for opting out, similar to the phone's telemarketing blocks.
I would guestimate that slightly less than a third of the mortgages I'm closing now are REO's and I hear local business leaders speculate foreclosures will continue to rise thru next spring before falling off noticeably. Major lenders have tightened requirements enough to stop a lot of the bailers (people getting a mortgage for a second home on a governemnt loan with the pretense of leasing the first home out, then walking away and sticking the lender with a property worth less than the balance owed, which, for those who don't follow housing trends, is one of the major causes of the crisis we are in). Too many legitimate credit companies have already fallen off (GMAC the most recent), or will with the government putting more money into Fannie & Freddie, as Fannie & Freddie will be trying to shore up making it harder for the mortgage lenders to sell to them. Gonna be a real roller coaster in the stock market Monday I'm guessing.
The whole lender thing is screwy. There were places in Seattle that were willing to lend hundreds of thousands based solely on what the borrowers told them - I called one when we were looking to buy, and the guy said the amount I wanted was too low. I said I knew what I could and couldn't afford, and that was my limit. He said, just ask for more and put it in a savings account, then use it to pay the mortgage off. Or work under the table, wink wink.
I also has some glitches getting my place here. The agent I was using co-brokered it with the listing agent. The problem came after the sellers had signed an acceptance, and a formal appraisal was gotten. It came back lower than they wanted it to, and they tried to back out of the deal, did a lot of shenanigans. Turned out they still owed more on it than the offer they'd accepted from me, and would have to come up with some cash to pay it off so it could be legally sold. My agent said "What part of contract do you not understand? My buyer is willing and able to make up the difference in the down payment." They said, well, we were hoping she'd back out and we could rent it instead. Listing agent already had some people lined up ready to move in. Then they dragged their feet at the closing, hoping that the closing wouldn't happen within the specified time frame and they'd get to keep it. Their own agent warned them if they did that, they were opening themselves to probable litigation, you can't just sign a contract and not follow through on it because you changed your mind later.
My BIL is another one who's not naive, particularly, but doesn't put paying bills at the top of his list of priorities. He has a really good job, bought his house early on at a good price, and should have had it paid off long ago. Now it's worth triple what he bought it for [location, location, etc] and when I left WA he already had a third mortgage on it to help pay the bills. Even DH was boggled at that. He could have been making double and triple principle payments, instead he was buying a lot of cool toys for himself and his SO that they really didn't need.
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Government intervention
