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Trickling? I'm not sure if you watched the video or have watched the news lately, but you can clearly see that ALT-A has surpassed the damages of subrpime mortgages.
You didn't have to put money down for ALT-A loans....I'm not sure where you're getting this information from. I work in the industry, and know the parameters of ALT-A/Subprime.
Okay. so maybe you didn't need money to get an Alt A loan.. again.. if the subpime mess hand't occurred the market wouldn't have crashed so far so hard and people in the Alt-A like myself would't be locked out of a refi.
I did see the video.. weeks ago.. actually months ago.. it's been aroudn for awhile.
Everyone's foc using on helping the person making minium wage stay in their homes .. they can't afford a normal interest rate to begin with..
but what about the borrower that actualy can afford a normal interest rate.. and by that i mean not a ridiculously low or teaser rate and not just to pay the interest without paying down any principal? They actually make the incomes to stay in their homes.. yet the banks are NOT even working with them.. my group of investors refused.. pretty stupid of them, if you ask me.
There are those beyond being able to afford a write down, or a fixed rate to a normal rate (rate htat most others are paying) and then there are those of us that can ..All i asked from my mortgage company was to keep my interest at the 6.95% i started at, not to adjust it, and I'd keep paying it on the full balance (never mind that my house is now worth 120K what it originally appraised at in 2005!)... and they refused.. and i had no problems making those payments for the past 2 years.. the adjustment I just could not afford and it would only go up as the rates went up till it was almost double my current.
So.. to asnwer the question.. yes.. the subprime is to blame.. becasue without the subprime crash all of us Alt A people (who have otherwise good credit and meet their obligations) would have been fine ..atleast I would have been.
If you watch the video then you will see that defaults of ALT-A loans are TWICEthe amount of subprime mortgages. Which means that ALT-A loans is to blame..
The media doesn't know the difference between ALT-A & Subprime, but the word 'subprime' sounds like a better word to use when you're 'exploiting' something.
You can look at the current sheets from the Federal Reserve, and see that the ALT-A loans is what's bringing AND will bring this economy to its knees. I'm glad they got rid of almost all subprime loans AND ALT-A loans.
ALT-A loans were generally for borrowers who couldn't verify their income, and usually didn't much money. What did they have was a good credit score. I knew a lot of companies that did Stated Income/Stated Asset loans with 0-5% for down payments.
If you watch the video then you will see that defaults of ALT-A loans are TWICEthe amount of subprime mortgages. Which means that ALT-A loans is to blame..
The media doesn't know the difference between ALT-A & Subprime, but the word 'subprime' sounds like a better word to use when you're 'exploiting' something.
You can look at the current sheets from the Federal Reserve, and see that the ALT-A loans is what's bringing AND will bring this economy to its knees. I'm glad they got rid of almost all subprime loans AND ALT-A loans.
ALT-A loans were generally for borrowers who couldn't verify their income, and usually didn't much money. What did they have was a good credit score. I knew a lot of companies that did Stated Income/Stated Asset
loans with 0-5% for down payments.
First off.. the video talks about the COMING Alt-A crisis.. not the current one.. it talks about how the potential for Alt A is larger than that of subprime. Were there those that lied, etc in that cateogory as well.. you bet! BUT.. i state again.. from most of the AltA's I know of now facing foreclosure, including my own, it's becasue of the subprme loans that started collapsing that locked the Alt'A's from refinanicing.
If you were an Alt-A and it was time to refi from your Arm BEFORE the subprime collapsed the market you did..but if the timing happened to be AFTER the subprime loans started defaulting then you were basically screwed..like myself.
and again a lot of those Alt-a's make enough to cover a fixed mortgage at what they started..they are not exotic low low rates..etc.
My argument still is someone that was paying for a house at a 6.95% interest for 2 years and in my case a $3000/month mortgage as opposed to a person that was paying a low 2% on the same loan amount to start and then jumped up to a 4, 5 or 6% who could never really afford a realistic rate (realistic meaning the current prime rate or slightly higher) is certainly a better candidate to be "saved" by a modification than the person that could never afford a realistic rate in the first place. And if the investors/banks would simpy do that they could avoid a lot of their distress.
Will there be those that truly lied and could onlyo afford interest if their alt-a loan was truly an interest only or choice of interest and principal and they could ever only afford hte interest.. absolutely.. but i don't fall in to that category.
For me. it doesn't matter.. in a few years i will be better off because if I did stay I would be severely overpaying for my home. I'm hurting because i'm loosing over $80K between improvements, down payments etc. And that sucks big time.. for me , what is supposed to happen will happen and think in a few years I will look back and be thankful that I didn't get that work out because again.. I would be overpaying..
And it also gave me the kick in the butt to relocate off LI which I wanted to do for a long time.. and I learned some valuable lessons.. see.. I'm turning lemons into lemonade!
The problem is the assumption that property rates would continue to climb and that you would be able to refinance. That isn't a problem with the so-called subprime collapse, that is just poor basic economics.
The problem is the assumption that property rates would continue to climb and that you would be able to refinance. That isn't a problem with the so-called subprime collapse, that is just poor basic economics.
Yup. I agree with that one. Also, some people may have thought the good times will last forever and made some bad financial choices.
Some people find it easier to say that they are a victim and blame their poor choices on the subprime market than take ownership over making a bad decision. It's crazy.
In my area the realtors have an add on the radio that IMO is hilarious. It says that real estate doubles every 10 years!!! (than they are very quick like stating the fine print that no one reads or is able to read) that it can vary in some areas.......nice add in this Tampa area where the foreclosures are sky high......The people who bought in '05 are for sure not thinking it will double the value of '05, in the next 10 years, they will be happy if the gain $ 50,000.... up to now they are only losing value.
I know that in real estate it always goes up and down and I have made good money in real estate and never lost money, but to say it doubles every 10 years, wow, I'm actually waiting for some one who wants to start some legal thing because of this.....and realtors are saying they never tried to sell homes by stating that the value will be up so or so much.....lol!!!!
The problem is the assumption that property rates would continue to climb and that you would be able to refinance. That isn't a problem with the so-called subprime collapse, that is just poor basic economics.
That IS the problem with the subprime in a lot of cases because those people that put 0 downon their home planned on the increase in equity growth over the 2 or 3 years time to give them the "cushion" to refinance OUT of the exotic mortgage with the arm INTO a fixed. ..
But that is PART of the subprime problem..
because the other part of hte subprime is that even if they could get out of their exotic mortgages a lot of people couldn't afford normal mortgage and could only afford the very low interest or to pay the interest only. They were counting on their income increasing enough.
I wasn't counting on either scenario... as a matter of factored in wage decrease because I was having a baby. I also put money down AND was puting money in on improvements, that in a normal market would increase the sales price somewhat (and in the previous market would have increased it at a faster tick.. however, I didn't really plan on that or was counting on that anyway).. Even if the price had adjusted downward slightly I still would have had the added cushion of the imrovements on top of the money down.
but as it turned out.. the subprime meltdown occurred plummeting the housing prices farther than anyone could have expected... farther than I would ever had imagined.
I also wonder if the original appraisal on my house was accurate and am questioning now wether that was a true number or not.. but all of that is water under the bridgge.. it is what it is.
Every week the sunday paper will have a full page ad advertising "how to make money in real estate with no money down".
There are still infomercials about real estate. There will always be someone that buys into it.
The way I see it, it's an individuals choice whether or not they buy into the advertised nonsense.
At the end of the day, adults are responsible for their own decisions. But we don't have to be responsible for their bad choices.
For people to hope and want a tax payer bailout because they took a gamble or rushed to buy property is just irresponsible.
To many people do the right thing and don't need to be paying more in taxes because of a bunch of fools who thought real estate was the next gold rush.
Where are you getting the idea that subprime mortgages were 0 down?
BTW - The video came out in April....we're almost is August.
The video said 'crisis to come BECAUSE most of the loans were behind, and the default period didn't happen yet'
It sounds that you're just going by what the 'media' has been telling you.
Your posts indicate that you're very bitter and taking things personally.
I'm a commissioned loan officer with no salary/hourly wage. I went Full Doc on my loan, and didn't go Alt-A as most lenders recommend that I should. I had to show 2yrs of full tax returns with 2 yrs of w-2's, and have a nice credit score. If anyone should be mad, it should be those that put a large amount down AND went Full documentation.
If there was 2billion in subprime mortgage defaults, then there are 4billion in ALT-A defaults. Twice the amount...
If we would've just had the subprime defaults, then we wouldn't have this problem.
The reason the economy is so bad is because the A+ borrowers are defaulting also. The funny thing is that they're contributing a lot MORE to this economic mess.
Then you have John Doe neighbor leaving his home because he doesn't want to pay anymore. He has a perfect history on his credit, but he doesnt want to be 'upside down' in a house. He would rather pay another person's mortgage by renting.
Then you have the problem with interest rates.
Most people think that the rates were/are going sky high because banks are 'tightening their guidelines'.
The truth is that there is a lot less money to be lent by banks than there was a few years ago.
Here's why:
Mortgages are packaged in securities, and sold on the market.
Everyone was drinking the koolaid a few years ago so they were buying these securities. Wachovia drank the koolaid, and purchased Golden West.
Then we had a problem with the subprime folks defaulting on their loans. Investors were now cautiously purchasing these securities but wanted a higher premium. The market was still okay UNTIL the ALT-A loans were defaulting.
Now the investors are seeing that borrowers with 680+ are defaulting, and there's no guarantee for ROI. So there's a lot less investors who even wanna touch mortgage backed securities.
As you know with simple economics
'High Supply with low demand' drives the prices lower.
'Low Supply with high demand' drivers the prices higher.
Less investors means less money to borrow. This is what's driving the rates from 5.25% 30yr fixed (april) to 6-6.125% 30yr fixed today.
sorry if i wrote too much...
Quote:
Originally Posted by TristansMommy
That IS the problem with the subprime in a lot of cases because those people that put 0 downon their home planned on the increase in equity growth over the 2 or 3 years time to give them the "cushion" to refinance OUT of the fixed INTO a fixed. ..
But that is PART of the subprime problem..
because the other part of hte subprime is that even if they could get out of their exotic mortgages a lot of people couldn't afford normal mortgage and could only afford the very low interest or to pay the interest only. They were counting on their income increasing enough.
I wasn't counting on either scenario... as a matter of fact I facotred in wage decrease becaue I was having a baby. I also put money down AND was puting money in on improvements, that in a normal market would increase the sales price somewhat.. Even if the price had adjusted downward slightly I still would have had the added cushion of the imrovements on top of the money down.
but as it turned out.. the subprime meltdown occurred plummeting the housing prices farther than anyone could have expected.
Where are you getting the idea that subprime mortgages were 0 down?
BTW - The video came out in April....we're almost is August.
The video said 'crisis to come BECAUSE most of the loans were behind, and the default period didn't happen yet'
It sounds that you're just going by what the 'media' has been telling you.
Your posts indicate that you're very bitter and taking things personally.
I'm a commissioned loan officer with no salary/hourly wage. I went Full Doc on my loan, and didn't go Alt-A as most lenders recommend that I should. I had to show 2yrs of full tax returns with 2 yrs of w-2's, and have a nice credit score. If anyone should be mad, it should be those that put a large amount down AND went Full documentation.
If there was 2billion in subprime mortgage defaults, then there are 4billion in ALT-A defaults. Twice the amount...
If we would've just had the subprime defaults, then we wouldn't have this problem.
The reason the economy is so bad is because the A+ borrowers are defaulting also. The funny thing is that they're contributing a lot MORE to this economic mess.
Then you have John Doe neighbor leaving his home because he doesn't want to pay anymore. He has a perfect history on his credit, but he doesnt want to be 'upside down' in a house. He would rather pay another person's mortgage by renting.
Then you have the problem with interest rates.
Most people think that the rates were/are going sky high because banks are 'tightening their guidelines'.
The truth is that there is a lot less money to be lent by banks than there was a few years ago.
Here's why:
Mortgages are packaged in securities, and sold on the market.
Everyone was drinking the koolaid a few years ago so they were buying these securities. Wachovia drank the koolaid, and purchased Golden West.
Then we had a problem with the subprime folks defaulting on their loans. Investors were now cautiously purchasing these securities but wanted a higher premium. The market was still okay UNTIL the ALT-A loans were defaulting.
Now the investors are seeing that borrowers with 680+ are defaulting, and there's no guarantee for ROI. So there's a lot less investors who even wanna touch mortgage backed securities.
As you know with simple economics
'High Supply with low demand' drives the prices lower.
'Low Supply with high demand' drivers the prices higher.
Less investors means less money to borrow. This is what's driving the rates from 5.25% 30yr fixed (april) to 6-6.125% 30yr fixed today.
sorry if i wrote too much...
What you're saying makes sense.. my point was that the subprme meltdown happened first causing things to tighten and make it difficult for the Alt-A's to refi out of their ARM mortgages. Again.. I would have been able to if things didn't go south..
but again.. all water under the bridge.. arguing about it is not going tochange it..
My problem NOW is the stupid way the investors are handling this issue. Rather than turn to gov't for a bail out they should be looking at each and every loan on their books that are defaulting and evaluating. Rather than stick to their rigid previous rules of what they would do, they should consider modifying people like myself into a fixed rate.. and in my case the rate I was paying was a 6.95"%. I obviously can afford it as I have been paying that for the past 2 years ON TIME! I think that makes for a good case of she can handle it!! ( and proves that if i was given that rate at a fixed int he first place all would be hunky dory) .
Howeer, they are not doing that.. instead they are not changing any of their ways and shooting themselves in teh foot as a result.. then looking to the gov't to bail THEM out while ALSO leaving their homeowners out in the cold and hurting.
It just does not make logical sense whatsoever to me,, byt tgeb agaub U guess this whole mess just proves that these financial "genuises" really had no good logic to begin with
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