“My wife and I went through a foreclosure and bankruptcy here in Ohio (where we lead the nation in foreclosures). The long story short – we bought a house for $32,000 in 1995, but couldn’t afford to fix it up. Just kids at the time (I was 20, she was 22), we were expecting our son and found a fix’er upper. We took out a subprime second mortgage to do the much needed repairs ourselves. The neighborhood was going to hell and after seven years we wanted to get out, but we had no real equity…”
mortgages
Proposed Law Would Let Bankruptcy Courts Rewrite Predatory Mortgages
By 9.25.07
Several Democrats proposed a bill last week in the House of Representatives that would allow bankruptcy courts to alter mortgages written by so-called “predatory lenders.” The bill would save around 600,000 Americans from foreclosure, says its author, Representative Brad Miller from North Carolina.
The Optimal Mortgage For The Rational Borrower
By 9.22.07
Two professors have released a paper branding adjustable rate mortgages, which are responsible for the subprime meltdown, as the optimal mortgage type for rational borrowers. As we know all too well, few borrowers are antiseptically rational. According to Columbia professor Tomasz Piskorski and NYU professor Alexei Tchistyi, ARMs hold several unrivaled advantages:
The Case Of The Man Who Should Have Known Better
By 9.20.07
Back in 2005, my wife and I bought our first condo. We live in the Central Coast of California, in San Luis Obispo, where the property values were skyrocketing, and were not supported by the wage base, similar to Monterey and Santa Barbara. It was the top of the market and I knew it, but we had a very slick mortgage broker who got us qualified (it wasn’t a no-doc loan, but it was a 100% finance, 80/20 with a first and a second, the first was a 6.5% 2/28 ARM, the second a 9% fixed.) We were assured at the time and up to as recently as this Summer, that we would have no problem re-fi-ing that loan (and even paying off our lower-interest student loans by taking some cash out in the process=wtf???) by the same broker. Of course that didn’t happen…
In Wake Of Fed Cuts, Mortgage Rates Rise Slightly
By 9.20.07
Bankrate has a really interesting article about the effect that the Fed’s rate cuts are having on the mortgage industry. As constant readers of the site are already well aware, the subprime meltdown has lead to a crisis in the secondary mortgage market—investors are no longer interested in purchasing non-conforming loans.
Countrywide Gets Another $12 Billion In Bailout Money Financing
By 9.20.07
Reuters is reporting that Countrywide has announced that it has secured an additional $12 billion in financing to help it hang on through the housing slowdown.
By 9.19.07
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If you’re upside down on your home mortgage, don’t be afraid of losing your house. It could be the best thing to happen to you. [Bankrate]
Fed Cuts Rate by Half Percentage Point
By 9.18.07
The Fed cut interest rates by half a percentage point this afternoon, citing “tightening of credit conditions” that have the potential to “intensify the housing correction.”
Foreclosures Up 115% From Last Year
By 9.18.07
Foreclosures “zoomed” in August, up 115% from last year and 36% from July according to the newest numbers from RealtyTrac. This is the beginning of one of three remaining waves that will hit the market in the next year. This wave is expected to peak in October as 2 million 2/28 ARMs reset to market rates and an estimated 600,000 homeowners can no longer afford their payments.
ETrade Exits Wholesale Mortgage Business, Warns Investors About Subprime Fallout
By 9.17.07
E*Trade is warning its investors that profits will come in 31% below estimates and that it is exiting the wholesale mortgage business and “streamlining” its direct mortgage operation due to the “disturbance in the credit markets.”
Greenspan "Didn't Really Get" That Subprime Lending Could Hurt The Economy
By 9.14.07
Former U.S. Federal Reserve chairman Alan Greenspan told 60 Minutes that he “didn’t really get” that irresponsible subprime lending could be significant enough to hurt the economy, but he still defends the decision to keep interest rates low from 2001-2004.
Southern California Home Sales Sink To 15-Year Low Forcing "Blow-Out" Sales Of New Homes
By 9.13.07
Bad news for Southern California; home sales in August dropped to a 15-year low according to the LA Times. Sales plunged 36% from last year and 71% of Southern California zip codes are reporting declines in housing prices.
Deceptive Mortgage Advertising Language To Watch Out For
By 9.12.07
In an almost comical case of too little too late, the FTC wagged a big finger at deceptive mortgage ads Tuesday. Here’s some of the red-flag advertising language they warned consumers to watch out for:
The Big, Big List Of Subprime Mortgage Layoffs And Closures
By 9.10.07
The Truth About Mortgage has been compiling a list of mortgage lending layoffs and closures since the end of February and the effect is staggering. The list, last updated today, now has over 250 entries. Anyone looking for a quick and easy way to freak out about the mortgage market need look no further than this list.
Ameriquest Is Dead
By 9.10.07
Ameriquest, the lender the epitomized everything that was f*cked up about the subprime mortgage meltdown, is dead.
By 9.10.07
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The step-by-step process of $130,000 gross yearly income housing bubble poster couple getting foreclosed, a case study. [Dr. Housing Bubble Blog]
WaMu Says Housing Market In "Perfect Storm"
By 9.10.07
“The combination of rising delinquencies, higher foreclosures, more housing inventories, increasing interest rates on many mortgages and greatly reduced availability of mortgages due to limited liquidity is creating what we call a near-perfect storm for housing,” Chief Executive Officer Kerry Killinger said.
Facing Foreclosure? Take A Deep Breath And Don't Panic
By 9.8.07
The ongoing subprime meltdown will claim its next victims in October, when adjustable rate mortgages worth over $50 billion reset, but homeowners facing foreclosure can keep a roof over their head by following a few common-sense tips. Above all, don’t panic, and don’t ignore the problem – instead, try the following:
