Why wait to buy a house ?
Mortgage fraud caused global liquidity crisis.
We have all heard about the continuing instability in global debt and equity markets. The consensus is the volatility is driven by the ongoing problems in the U.S. housing market. I’m sure many of you ask "What is really going on?" The crisis began in silence, in April 2007, when New Century Financial, a sub-prime mortgage lender, filed for bankruptcy protection. A month later, USB AG, a giant financial company, announced its hedge fund business had lost 150 million Swiss francs in the first quarter of the investments made in the USA sub-prime mortgages. In July 2007, Wall Street, Bear Stearns closed a pair of hedge funds after hedges on mortgage-backed securities was the wrong path. Before the losses, the funds were worth $ 20 billion combined. Bear Stearns is described as isolated incidents, trying to dismiss their importance but investors were not convinced and Bear Stearns shares slid, resulting in the dismissal of co-chief operating officer Warren Spector.
He came to head the markets late July and early August 2007 as concern mounted that mortgage securities may not be as safe as people think. Something he had written a few months ago. Then came the August 6 bankruptcy by Melville, NY-based American Home Mortgage Investment Corp. American Home, once the nation’s 10th largest mortgage lender, says that she was subjected to "extraordinary disruptions" that effectively cut off funding needed to make new loans. The fall in U.S. house prices and a spike in payment defaults have scared investors away from mortgage debt, including bonds and other securities backed by mortgage loans. Banks, then, throughout the world were looking at their portfolios and finding considerable exposure and hedge funds are closing in an attempt to keep outside investors who wanted to redeem their shares. The result was a modern-day work in a bank. France ’s biggest bank BNP Paribas, froze 2.2 billion U.S. dollars, held in three funds citing its exposure to mortgages of high prime mortgages in the U.S. That solidified fears that risk was spreading worldwide. With cash reserves running low, banks refused to lend to each other and interest rates that banks charged each other rose well above the 4 percent level set by the ECB, prompting its unprecedented injections of cash, followed two days. U.S. Federal Reserve and central banks in Asia quickly followed this strategy. Now we’re in "liquidity crisis".
In the mortgage industry, most developers do not own mortgages from the mortgage as a long term investment. Sell or securitize loans in the secondary market. That is Wall Street or other large aggregators of mortgage products such as pension funds or Freddie Mac, Fannie Mae. Today there is concern how the performance of the mortgages – the borrower can make payments? The result is a secondary market is wary of sub-prime loans, loans with a higher value to the documentation of loans and reduce borrowing. Now many loans simply can not be sold, often with immediate effect. For those that are sold, are sold at a much lower price, also with immediate effect. These recent significant drop in mortgage companies’ profits. In some cases, mortgage companies are out of business or bankrupt, like American Home as a recent example, the country, but not wanting to admit that as a service to all loans? Probably the Bank of America too, since you opened your savings account for the country. With less liquid loans, the mortgage market has a liquidity crisis. But why is there a concern of a mortgage borrower can not make their mortgage payments? I think it was fraud in the origination of mortgages that has caused the current crisis and growing concern, not loan programs. A liquidity crisis that would never have happened but for mortgage fraud.
Mortgage fraud created a terribly dangerous housing bubble that burst, destroying the homes, neighborhoods and communities and the overvaluation of houses as falsely inflated the prices of nearby houses, while increasing property taxes. All for the illusion of increased demand in late 2003 until mid 2005. Did you know that "The probability of default rises by 300 percent if the borrower is said to reside in the property, but not" according to Arthur Prieston, chairman of Prieston Group? Did you know that "up to 70% of mortgage early payment can be linked to a significant misrepresentation in the loan application." according to BasePoint Analytics? Did you know that "Americans believe mortgage fraud wrecked real estate market," according to Housing Predictor? A new report by the Joint Economic Committee of Congress cites a study that said, "a house of exclusion reduces the value of homes located within one eighth of a mile (or block) by an average of 0.9 per cent. " In a neighborhood of homes of $ 300,000, that’s a loss of $ 2700 per home in foreclosure in the neighborhood. Then multiply that loss by more than one foreclosure on the block. Mortgage that would never have happened but for mortgage fraud.
Mortgage companies, offices of real estate appraisers, title and escrow companies, builders, etc are going to exit the business of mortgage fraud as the source of all loans, not just sub-prime loans, but loans and principal. They would have done better for themselves and their clients, recalling the 24 words that define the ethical "
1. Is it the truth?
2. Is it fair to all concerned?
3. Will it build goodwill and better friendships?
4. Will it be beneficial to all concerned? Herbert J. Taylor
There are a number of ways in which mortgage lenders raise money to lend to mortgage customers. For independent mortgage authors, often with a line of credit with a major financial institution, or Wall Street. And other large financial institutions themselves to obtain financing from the parent company. Independent mortgage companies usually around 98% of the value of the loans produced. When the value of loans decrease the originator of the loan that has taken more than 98% of the value. Therefore, the banks exercise what is commonly known as a "margin call". This means that demand for the mortgage originator to send cash to reach the level of 98%. If the loan originator does not have the money to give because they have not been able to sell loans in the secondary market, which is a loan originator alarming problem – no more money to lend. One outcome is no more original home loans – or leave the home loan business. Another is the strengthening of the underwriting guidelines home loan. At the moment we are both.
We are also seeing the U.S. government and Federal Reserve again lowering interest rates just made the problem worse. For example, the dollar devaluates.
It is still a good time to buy or refinance as interest rates are low, and there are many safe and sane lending programs out there, especially FHA and VA, however, the housing market still has not beaten down. Do not buy yet. In a couple of years when all the inventory exclusion has eliminated the system, then yes. According to the Multiple Listing Service of Reno, over 16% of its inventory of real estate MLS is a bank owned! The pressure force housing prices below.
It is vitally important to work with a reputable lender, loan officer, real estate, title company and escrow officer. Check your references, as well as the BBB, the Property Division NV, NV and the Division of Mortgage Brokers.
Reno is pretty good as we move back to the opening of affordable housing for our roads for the first time home buyers, which opens the housing market for the transfer of the buyer. Consider that the U.S. Census Bureau projects that Nevada will lead the way in population growth over the next 25 years to more than double its population to 114%. Nevada has lucrative tax incentives and a robust economy, especially Reno and continues to attract new residents. Nevada is one of a handful of states have no income tax in the State of Nevada joins popularity. According to Housing Predictor, Reno-Tahoe is attracting new residents from around the world because of our mountains and natural beauty. Nevada is seeing a growth period that will last for many years and as a result, the housing market will do very well in the long term. The market will probably go back to what the National Association of Realtors who had more than 65 years before the mortgage fraudsters manipulated, annual appreciation of 2.9% over inflation. And that’s great to own a house that is part shelter, part investment and subsidized by the deductions of federal income tax.
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