Subprime from the Front Line
#1
Posted 08 April 2007 - 11:27 AM
Far from being the contagion I was expecting, the mortgage markets and residential real estate markets have not only absorbed this shock but are exhibiting signs of even greater confidence and liquidity now that the underlying concerns about fraud and irrational underwriting in the mortgage markets and loose appraisals of collateral have been acknowledged.
There will still be more headlines but those unscrupulous players not already knocked out are quickly being isolated from participating by the mbs markets. Underwriting to exact specifications for each loan program has returned following the sloppy underwriting that was at the heart of the real problem in the mbs market.
This tension release and resulting rapid tightening up of the industry appears to have worked amazingly well and amazingly quickly.
http://www.dailyspec...rdpress/?p=1278
Defenders of the status quo are always stronger than reformers seeking change,
UNTIL the status quo self-destructs from its own corruption, and the reformers are free to build on its ashes.
#2
Posted 08 April 2007 - 08:35 PM
There is still an enormous number of subprime and stated income loan programs available for people with low credit scores and few assets. Only the programs for the most marginal borrowers have been taken from the market. And new creative programs have been introduced to fill the temporary void at startling speed. It has truly been a marvel to behold.
Far from being the contagion I was expecting, the mortgage markets and residential real estate markets have not only absorbed this shock but are exhibiting signs of even greater confidence and liquidity now that the underlying concerns about fraud and irrational underwriting in the mortgage markets and loose appraisals of collateral have been acknowledged.
There will still be more headlines but those unscrupulous players not already knocked out are quickly being isolated from participating by the mbs markets. Underwriting to exact specifications for each loan program has returned following the sloppy underwriting that was at the heart of the real problem in the mbs market.
This tension release and resulting rapid tightening up of the industry appears to have worked amazingly well and amazingly quickly.
http://www.dailyspec...rdpress/?p=1278
No doubt about it. The following is an excerpt from a report from Mike Morgan, a real estate uber-bear whose posts appear on Mish's blog from time to time:
This was a young couple in their late 20’s buying their first home. They just moved to Florida from New York. He’s a truck driver and she’s works as an assistant in an office. Perhaps they have a combined income of $65,000. They have about 5% to put down on a $250,000 home and their credit is under 650. I got him qualified for 95% financing at 7.5% for 30 years.
Credit crunch -- not hardly.
#3
Posted 09 April 2007 - 01:21 PM