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What effect do you think the mortgage freeze will have on the investors who buy the Mortgage backed Securities? Many are saying this could make Mortgage money even harder to come by, due to the fear of intervention at a later time. Why would investors want to take on the increased risk of investing in a weak housing market unless there was a larger potential for rewards. Is it possible the genuises that caused this mess, could make it worse by their tinkering?
I don't see why anyone would invest in mortgage back securities if they are going to change the rules in the middle of the game. I wouldn't be surprised if there are lawsuits by investors down the road due to lack of full disclosure about rule changes and government intervention that wasn't expected. There are better places to invest.
What effect do you think the mortgage freeze will have on the investors who buy the Mortgage backed Securities? Many are saying this could make Mortgage money even harder to come by, due to the fear of intervention at a later time. Why would investors want to take on the increased risk of investing in a weak housing market unless there was a larger potential for rewards. Is it possible the genuises that caused this mess, could make it worse by their tinkering?
That's what I am hearing from Wall Streeters - that they expect this to tighten credit further - which will only make the housing market tumble more.
FYI, there have been a LOT of below the radar firings on the Street.
I have always been suspiciouis of these confusing and unusual derivatives. Never wanted to get into something that was so much based on big gambles by the borrowers and investers.
I still have trouble understanding why someone would go into a fancy loan over a fixed interest simple to understand loan. Guess it is the incredible lack of financial knowledge of most people.
I still remember in the 70s having to beg for a $200 limit credit card and being turned down for a mortgage even with two incomes and no debt.
I was had a chance to invest in MBS a couple of years ago. As I have some economic sense I politely declined and put some of my money in Norway. The rest is going to get moved pretty quickly. I do not have any faith in this economy.
MBS as a liquid source of cash, right now, is dead, at least as far as sub-prime and ALT A are concerned. Hundreds of wholesale lenders are going under and only the greediest of M.B. are crying and only because their 3 point yield spread premium deals are drying up. I think we are seeing the death of mortgage backed securities in the above 2 mentioned cases anyway --- which will--- if it does happen --- only divide the classes even more drastically.
That's what I am hearing from Wall Streeters - that they expect this to tighten credit further - which will only make the housing market tumble more.
FYI, there have been a LOT of below the radar firings on the Street.
This will be very good news for those of us hit hard by taxes due to the real estate bubble. I hope it becomes almost impossible to get a mortgage!
I hope it becomes almost impossible to get a mortgage!
It's only going to be impossible if you're well-qualified. The government is bending over backwards to put first-time and low-income borrowers into homes. They are passing out low-rate FHA mortgages with 3% down like cigars in the maternity ward, then giving them tax credits afterward. Are these not high risk borrowers? Are we not seeing the fallout now from giving easy money to high risk prospects?
If you're a long-time homeowner with a perfect payment history, you'd better have 20% or more down and a 740 FICO and be prepared to over-document every single aspect of your financial life for the past three years. And then, they're going to have a hard time funding you.
We live in a Bizarro world.
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