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From where I sit, this whole economic meltdown at arms distance is fascinating. No, I am not talking about how I "feel" about it or how its impacting peoples lives. I am talking about the 20,000 foot look down at the mess.
It turns out there is a capital firm that will be lending subprime loans to borrowers that are not hitting all the right points with the traditional lenders. Granted these arent no doc loans, there WILL be requirements, but I cant help but think of this model is successful, others will try and emulate it. Mostly this will be affecting the Jumbo loan category which will be lowered in Oct.
I hope this works. It will only open up more and more just like it because of the quick profit that can made originating the loans. And like I mentioned above, from afar, will borrowers jump on this or quickly forget about the disaster we just got out of? Regardless, I am certain the Govt will bail them out too, whats there to lose?
If you are a REATLOR or broker, do you see this as a great oppt or does your ethical and moral compass hold you back from making mention?
There has always been a vehicle in place for less that stellar applicants to get a mortgage, but not the no doc loans of recent past, which this article also states is not happening. Higher downpayment, higher interest and shorter terms are nothing new for people who want a mortgage but can't get financing at the bank or one of the main lenders. Good payments, stable work history, and no more debt accumulation for 5 years or so, and they can possibly refinance into a better rate.
From reading the article it seems like it is less riskier for the banks because they are requesting 40% down payments and don't think people have that kind of cash lying around (well that is if they the people acquiring the loans didn't already default on another mortgage and kept the money).
Realtors are not loan brokers so they don't know what type of loans their clients are getting. They just want to know if the client is capable and qualified to buy. Don't think ethics and or morals are part of the realtors' concern when dealing with loans. The worse the loan is for the loan broker the more money they will make so the ethics and morals are not a factor for the broker. People need to do their homework.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Originally Posted by bayarea-girl
Realtors are not loan brokers so they don't know what type of loans their clients are getting. They just want to know if the client is capable and qualified to buy. Don't think ethics and or morals are part of the realtors' concern when dealing with loans. The worse the loan is for the loan broker the more money they will make so the ethics and morals are not a factor for the broker. People need to do their homework.
I sure wish you would stop representing what realtors are and are not. I'm fairly well versed with the variety of mortgage products out there. I've got several mortgage brokers that stay in touch with me telling me what rates are and what mortgage products they have available.
First you say we don't know about loans and in the rest of the paragraph, you slam our morals and ethics in dealing with loans.
For one, its not banks getting involved, its a private capital firm.
I partially agree about agents not necessarily having to know how the financial aspect of it works, but they do. Its not like they dont read about news related to lending standards etc. Otherwise I dont think that agent would be around for too long in this environment lol. A good agent IMHO KNOWS something about something. Not just picking the same listings I see on my computer and opening up lock boxes.
So my point is that if their buyer was having a hard time getting financing, does the agent point out this loan product as something they read about to further investigate?
Dmenscha, I think you are too quick to come down on me rather than understanding what I am trying to say. No I don't represent realtors and don't know how all of you think. On these boards we are allowed to give our point of view and that is what I am doing. Actually, I never slammed realtors on this topic. For realtors to know all the loan products and or suggest to their clients what is available I don't believe is in their job description. I would rather an agent know all there is to know about the area and the homes I am interested in purchasing rather than loan products. That is fair don't you think? I don't mind a realtor suggesting a bank and or a loan broker. So no I don't believe ethics as it relates to loans are part of the responsibility of a realtor.
shmoov-, I'm sure the realtor reads and knows about news as it relates to their industry. But I'm sure they have a list of loan brokers they could connect their clients with that can point them in the direction of obtaining all kinds of loans (I'm sure there is a commission in it for them as well). If the client had difficulty in financining a loan it would be nice if the agent or loan broker (mainly the broker, but this I doubt hardly happens) would say you know I don't think now is the time to buy and you can wait. Instead of pushing a loan that will lead the buyer into a financial bind. The sad thing is banks and loan brokers don't care about the individual they just want to make $$$ again the worse the loan the more money they make.
I'd really like to understand the underlying working of these loans more before making any judgments... If these loans are being securitized / dumped into CDOs, then I would be concerned of repeats from the past.
I understand higher risk should be higher rewards for investors, but they shouldn't be playing the classic Goldman game of betting these loans default while selling them to other investors. Hiding behind the fact that they're bundled into giant bond funds when someone tries to research a specific loan isn't cool.
Traditional lending and servicing (where your loan stays simply a loan) with a higher downpayments and interest rates would be a better long term approach.
...But I'm sure they have a list of loan brokers they could connect their clients with that can point them in the direction of obtaining all kinds of loans (I'm sure there is a commission in it for them as well). ...
If you are implying that Realtors get a referral fee of some sort from loan brokers, then you are incorrect. That would be illegal, in violation of RESPA.
I think this is different because the government is not forcing these institutions to issue subprimes so they shouldn't feel obligated to bail them out when the borrower defaults.
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