One of the largely unreported white collar crimes in the mortgage business is that loan officers inflate the income of marginal buyers so they are approved to buy a home they can not possibly qualify for.
Greed on the part of the buyer for supposedly inflated home valuation and greed on part of the mortgage lender for a juicy commission. The bank regulators looked the other way, the mortgage higher ups tacitly approved the practice and now with a declining real estate market buyers are bailing out in droves. Foreclosures are rampant.
Unsuspecting investors buy these mortgage obligations from brokers assuming they bought a sound investment. For instance Goldman Sachs , one of the top sellers of C.M.O.’s (collateral mortgage obligations) for the past few years sold about $100 billion to unsuspecting investors.
With the real estate decline, the bubble popped and everyone is looking for a scapegoat.
The real cause is the mortgage scams and lack of enforcement in inflating mortgage applications at the entry level. With the interest only mortgage obligations, greed on part of all parties involved perpetuated the fiasco.
A Harvard study show a more upbeat view of the current housing market value correction than offered by most economists. All hinges on the course of employment growth and interest rates. The run up in housing demand over the years is buoyed by the huge increase of immigrants and their children and relatives. That trend should continue for the foreseeable future.
Both political parties are paper tigers when it comes to immigration reform. The situation is not like it was with most 2nd generation immigrants parents who had to go through strict Ellis Island immigration standards.
The number of foreclosed home returning to the market is having an effect on builders and investors. Home market values should continue a downward trend as the growing problem of affordability strengthens. The downward pressure on wages due to the large influx of immigrants is taking its toll. High housing cost and non-housing expenses leaves home ownership on a slippery slope.
Mortgage rates have remaind stable due to the Federal Reserve not raising interest rates. The pre-owned single family home sales market is soft this seaon. Subprime lending and adjustable rate market find many battling foreclosure because of greed for home ownership and premium interest rates. Consumers with poor credit and financial flaws put themselves and their banks in risk.
Prices are going raising as the cost of living goes up. Property values shrinking, wages and the job market is still decent. The burden of local, state and the federal government are spending money like drunken sailors and it's only the American fighting attitude that keeps the working guy/gal able to continue. We all know that consumer inflation is far higher than the 2.1 percent official CPI inflation rate. Politicians are “cooking” the books. Eventually the markets will self-correct, but will we ever get spend-thrift politicians?
Existing home sales are dropping sales at the fastest pace in 18 years. New home sales have improved slightly. The good news is the mortgage rates have dropped for the time being. Naturally, all hinges on the inflation fears and the perceived direction prices are going when the Federal Reserve eyeballs them. The sub-prime problems hurt the lender as much as the borrowers being the mortgage companies have to find a buyer to recoup their investment.
With the declining real estate prices in many parts of the country, now is a good time to scrutinize comparable market values to your home. In a declining real estate market winning your property tax appeal is almost a sure thing. Housetaxax.com is an excellent source of property tax appeals. House Values & Property Taxes Confidential information on house market values for property tax appeals.
Further housing weakness will be triggered by a credit crunch was predicted by UCLA Anderson Forecast in a recent Investment Business Daily article.
UCLA Anderson Forecast predicted growth to rise and a fed funds rate to 4.5% from 5.25% and they see at least two, if not three, Fed rate cuts keeping economic growth this year in positive territory. Lower mortgage rates are on the horizon.
With a 8 1/2 month backlog of housing inventory, a drop in mortgage interest rates would rev up a few engines. The National Association of Realtors said that pending home sales rose 0.7%, a gain that came despite bad weather and the impact from subprime mortgage problems.
Unsold home inventory shot up 5.9% in February to 3.75 million while the average 30-year fixed-rate mortgage was 6.16% in February according to Freddie Mac.
Existing-home sales 3.9% rise in sales for February. It would take 6.7 months to sell off the excess inventory of homes at the current real estate sales pace.
Subprime woes have left the housing industry in an adjustment phase with borrowers with poor credit defaulting on mortgage loans. Estimates suggest it will cut housing demand by 100,000 to 200,000 units annually.
