Sub-prime mortgage lenders failing.

[Wcross]

http://today.reuters.com/news/articlebusiness.aspx?type=bankingFinancial&storyID=nN02342721&from=business

NEW YORK, Jan 2 (Reuters) - Mortgage Lenders Network USA, a large U.S. subprime lender, said it has stopped funding loans and accepting applications for loans, citing deteriorating conditions in the mortgage market, and has temporarily laid off about 80 percent of its 1,800 employees.
Privately held Mortgage Lenders also said it is in "strategic negotiations" with several Wall Street firms regarding its loan operations.
Roughly four-fifths, or about 1,440, of the Middletown, Connecticut-based firm's employees are on "temporary furlough," spokesman James Pedrick said in an interview.
Mortgage Lenders said it has five regional lending offices and employs about 950 people in its home state.
The retrenchment is the latest sign of stress among subprime lenders, which make higher-cost loans to people with weaker credit histories.
It comes less than a week after similar-sized rival Ownit Mortgage Solutions Inc. filed for Chapter 11 bankruptcy protection.

[AndyA]

1. Our economy is about to hit the skids.

It's all based on borrowing, reckless lending, and lies.

Let's see Bush/GOP squirm out of this one. In the business world, people are not saying things are going well, they are all concerned.

[ChairmanAgnostic]

2. no, the neocon talking heads are all

giving glowing reports about the economy, about how GREAT THE MARKET IS, and how unemployment is so low. duh, yeah, if you fix the count so they drop off the unemployed rolls into some other category that ignores hundreds of thousands, if not more.

[AndyA]

5. Oh, OK. So everything is really OK. I'll stop worrying now.

If the neocons say it's so, it must be, right? After all, they wouldn't lie to us... :eyes:

:sarcasm:

[Joe Bacon]

50. Gee, all those Pre$$titutes say it's Nancy Pelosi's fault...

...She isn't even elected Speaker yet and here they go!

[still_one]

4. They will. The ones affected will not be talked about

Observe what is happening now, many CEOs who have recklessly managed their companies are steping down with HUGE pay backs

Look at the biggest pig from United healthcare who get 1.7 BILLION dollars, or the ex-CEO of PFE who get over 250 million dollars, while his companies stock has down NOTHING for the past ten years

There are so many more on that list also, including the CEO of HD who just stepped down today with a huge payoff

They do NOT care for the company, the people who work for the company, or the country. They are only concerned with enriching themseleves

In 2008 they are going to allow people to convert their IRAs to Roths without an income requirement. They are NOT doing this to help the small guy, they are doing this to help the fat cats move their money into instruments whose future earnings will be exempt from taxes

They will be long gone when our children have to pay for the consequences of these actions

[A HERETIC I AM]

10. Who is the "They" you are talking about re: IRA's & Roths?

"In 2008 they are going to allow people to convert their IRAs to Roths without an income requirement. They are NOT doing this to help the small guy, they are doing this to help the fat cats move their money into instruments whose future earnings will be exempt from taxes"

Is everyone with an IRA a "Fat Cat"? Do you know what the real differences between a traditional IRA and a Roth IRA are?

In my mind, the above statement sounds terribly misinformed.

[flamin lib]

22. There was an income cap on Roth IRAs.

Lower income people could avoid taxes forever, high rollers had to pay taxes when they cracked open the IRA. In 2008 the cap was lifted so even the very wealthy with huge retirements could avoid paying taxes. It's an unseen addition to the deficit to reward people who don't need the help.

[A HERETIC I AM]

25. Your statements are incorrect.

"Lower income people could avoid taxes forever, high rollers had to pay taxes when they cracked open the IRA. In 2008 the cap was lifted so even the very wealthy with huge retirements could avoid paying taxes. It's an unseen addition to the deficit to reward people who don't need the help."

The "Cap" is Modified Adjusted Gross Income (MAGI) and it isn't lifted at all for 2008. It is $100,000 until 2010. Regardless, any conversion from a traditional IRA to a Roth creates a so called "Taxable Event" - in other words, when you convert, the amount of money is added to your income for that year and taxed at your marginal rate, meaning if you are in the 25% bracket it is taxed at 25%, in the 28% bracket at 28% and so on. Thereafter it grows tax-deferred and is withdrawn tax free.

Roth IRA contributions are made with after tax money so the tax has already been paid on the principal. You just receive the benefit of earning dividends and interest on your investments without having to pay capital gains tax yearly and they are tax free when you begin withdrawals. One benefit to a Roth is that if you find you still must work (Or want to keep working) after you turn 70 1/2 you can continue to contribute to it. This is not the case with a traditional IRA.

These rules benefit EVERYONE, including I am sure, many tens of thousands of DU'rs. To insinuate these rule changes benefit only the very rich or do not benefit anyone else is misinforming any and all who are trying to save for retirement.

I looked for a rule change that stated the MAGI was lifted for '08 and could not find one. If i am wrong on this i will happily capitulate.

[flamin lib]

26. You sound much more knowledgeable than I. I accept your

explanation.

I was wrong once before--thought I'd made a mistake but found out I hadn't.

[still_one]

30. How many lower income people do you know that are even saving for retirement?

Far as I can see their debt load is so high they can barely keep their head above the water.

and you are correct this only for conversions, the Income rules still apply

The rules may benefit everyone, but it will benefit only those who can afford to contribute in the first place. One way or another the deficeits that have been created will eventually have to be paid by someone.

What is your position on the estate tax?

[A HERETIC I AM]

34. My position on the Estate Tax is that it should revert back to the old rule

as it was under Clinton. There are enough loopholes to protect inheritances from excessive taxation. The uber wealthy don't need another one. And BTW, by "Uber wealthy" i refer to estates over 50 million of which there are thousands and thousands if not millions of families that fit that description in this country. Why 50 mill? Because it is not unusual for a relatively small entrepreneur to have built a business from scratch that could be worth that much in his lifetime. The money i most want to see taxed as estate money is the "Old" money - the estates up wards of 50 mill.

BTW, i often get calls from your typical wage earner that wants to set up a retirement account. Even a dollar a day over 20 years at 8% becomes almost $18,000. Thats 7300 days X $1.00 a day invested in an account averaging 8%. So, yes, there are plenty of poor people trying to save for retirement.

[still_one]

40. You and I agree on that, which is what I was referring to, the "old" money

Also, I am glad that I am wrong that typical wage earners are actually thinking about retirement, it is that I just haven't seen too much of that. I see people getting equity loans to pay off their credit card debit, and get into a terrible trap. Just listen to the callers to shows like Suzie Orman... They are in deep yogart

In 1980 a person could have taken 5000 dollars, bought a strip which was paying about 11.5% in their IRA, and in 20 years that 5000 dollars would have become about 60 grand

You are definitely preaching to the choir on that with me

[Tiberius]

56. Millions of families worth 50 million?

Not even close! Did you mean to say 5 million?

There might be millions of estates worth $500,000 - but even that would seem far fetched.

[A HERETIC I AM]

57. You are corrrect. I was way off......

A search on Google gives a figure of 17.1 Millionaires in the US in 2002. That is of course quite different than saying millions of estates worth 50 mill or more.

Suffice to say thousands and thousands?

[still_one]

29. I know what the difference is bud, I have roths, IRAs, and 401Ks

The "They" I am referring to are the fat cats that have been supporting this administration, pissing on the companies they represent, off-shoring jobs, and moving that cash into investments whose future earnings will not have any tax liabilities

My point was that in my view this was NOT to help the small guy but to help the wonderful corporate fat cats that have supported this administration. Sure, the small guy can take advantage of it if he can afford rent/mortgage, energy, and raising a family,in addition to saving for retirement, but my guess is that most of the small guys do NOT save for retirement in the first place

Do you think the deficiet is a good thing, and shipping technology, manufacturing, and inovation overseas so we can be more price competitive help the country?

Incidently, in 10 or 20 years when people find out they can't afford to send their kids to college, can't afford to retire, or can't afford heathcare, they won't get any tears from me. People allowed this administration in to destroy the middle class

No CEO is worth 40 million or more just because they can exploit the cheap labor overseas with the cooperation of the government

[A HERETIC I AM]

35. Then if you know the difference "Bud" you know they ALL refer to IRS regulations

1) I doubt seriously you are ever...and i mean EVER going to find a CEO with a 40 mil bonus using a Roth as his investment account of choice. There are much better ways to handle such accounts. A Roth IRA isn't one of them

2) In fact, it IS designed to help PRECISELY the little guy because many MANY Americans who ARE able to save because they don't live beyond their means are advantaged by these rulings. The fact that someone with a 7 figure retirement account can use them too is beside the point.

3) No I don't think deficits are a good thing. Clinton's budgets in the late 90's, the surpluses and the resultant relief of long term Treasury debt and the subsequent economic rally proved that.
3a) Shipping technology overseas is what technology companies do. If they have a cutting edge method of doing something, should they just not tell anyone about it?
3b) The loss of certain types of manufacturing jobs in this country is most certainly a bad thing, but unfortunately, the way trade rules and regs are, it is inevitable. Clinton and Gore and even Ross Perot had it right; Train and educate the populace to be technically competent, encourage businesses to seek ways to make money in alternative energy, technology and other advanced fields and we will lead this world once again.
3c) re innovation - see 3a
3d) Yes, being price competitive helps the country. Unless you choose to do no trade with any other country, this is an economic fact we will have to live with. There are thousands upon thousands of companies in the US that make products used all over the world that NO ONE makes better than we do from farm equipment to airplanes to valves, pumps, etc.etc.etc. The idea that we don't make any products here any more is poppycock. Check out the Thomas Register sometime, if you don't believe me. www.thomasregister.com
4) Many Americans, Democrats and Republicans alike don't have to wait 10 or 20 years to find these things out. They already know them and i doubt they are too concerned who is shedding tears for them. However, proper planning by EVERY wage earner can dramatically mitigate the issues you mention. Unfortunately, too many Americans would rather have the 42" plasma TV, rims that spin, stereos that can be heard in the next county and live in houses they can't really afford because of their own vanity than properly plan for their retirement/kids education etc.

5) I am inclined to agree with your last statement but with one caveat. There most certainly ARE CEO's worth hefty sums because of what they do for their companies, their communities and their employees. Jeff Bazos (Amazon) and the head of Costco are 2 that come readily to mind. There are, have been and will be plenty of others. Not every CEO of a large company is a robber baron.

I am as liberal as they come but i am also a capitalist. The two are not mutually exclusive.

[still_one]

39. Appreciate the dialog

Like you I am for the most part a liberal capitalist.

Item 1, you are absolutely correct
Item 2, In reality I don't think it will give much help to the "little guy" because of the accumulated consumer debt, and it is a positive, though one they may not be able to take advantage of. Perhaps I am out of touch though, and people are actually saving more, but everything I have encountered says just the opposite.
3. Clinton was saved by the internet boom, because for the most part the negotiated trade agreements were NOT in our favor. Especially since we don't require the same working condiditons for our trading partners as we do ourseleves. Fair trade yes, free trade, no way.

We used to be the leaders in autos, cameras, washing machines, dryers, etc. No more. Boeing is not what it used to be. Sure we still have products, but in my view we are losing the inovation.

4. I agree with you on item 4. One note, the 42" plasma TVs and stereos that you mention are not made here, which has nothing to do with the point you were making

5. Agree not every CEO is a robber baron, Gates and Buffet are two that come to mind who want to give something back

Most of my "outburst" was just an emotional response which actually was triggered by HDs CEO stepping down today NOT against the conversion. In fact I wish more companies would also provide a Roth 401K.

Also, I should not have responded to your comments with "hey bud", uncalled for on my part, appologize for that, and appreciate the exchange of ideas

[A HERETIC I AM]

43. And i appreciate it too....

Your point on Clinton I will absolutely concede but i think, and i am no economist, it could be argued that much of what fueled the dotcom boom was inexspensive capitol. As far as the trade agreement, i am also inclined to agree. Michael Moore once said "Clinton was the best Republican president this country ever had".

Fair trade is, in my opinion difficult if not impossible to attain as long as there is a Chinese or Mexican or Indian (etc) worker that will take $1.00 an hour (and see that as a good living) to make a Widgit when workers in this country simply can't live on and as a consequence won't take less than $15.00/hr to make the same widgit. Tariffs can even that out but....well...thats another can of worms, isnt it?

BTW...Boeing may not be what it used to be but i suggest spending a little time on their site; www.boeing.com They are alive and well and poised for one hell of a profitable run over the next decade. One article i read recently pegged a figure of up to 50 % of the international airline fleet will need to be replaced in the next 10 to 15 years and with the trouble Airbus is having getting the 380 delivered, more and more airlines are looking to the old reliable plane makers in Seattle for new birds. Boeing has been the largest single exporter in the US (when one looks at sales numbers) for quite a long time. The international airlines tend to be much more profitable than domestic US carriers and they have the money to spend on new equipment.

On # 4...the point i was trying to make was that, in my opinion, entirely too many Americans spend frivolously on consumer goods instead of paying down debt and saving for that rainy day. I have been as guilty as anyone of that, so i dont mean to preach.

Hat tip to your civility. PM me if you would care to talk further.

Regards,

Paul

[still_one]

3. Even if we were in a depression, it would NEVER be admitted by the MSM

[phantom power]

6. "Temporary furlough." Riiiiiiight.

I bet none of these employees are holding their breath for being called back to work.

[NMDemDist2]

36. that's so the company doesn't have to start paying unemployment I bet n/t

[leftyladyfrommo]

7. Sub Prime was a dumb idea to begin with.

They make loans to the most risky - at the highest interest rates.

And - most people who get these loans really get ripped off. The loan fees are incredible.

Doesn't surprise me to see them fail.

[Gormy Cuss]

8. I wonder how much of the "failure" is calculated.

The execs may just be recognizing that they've milked this product for all it's worth and it's time to get out.

What I'd like to see is a wholesale overhaul of mortgage lending regulations to level the playing field for consumers. I think that many get caught up in the hype and think that they are protected from predatory behavior because the government is regulating it. Too many figure out the hard way that morgage lenders aren't the same as banks.

[leftyladyfrommo]

11. I did mortgages for 30 years. Mostly people get screwed.

I'm sure lenders were aware that subprime could only go on for so long. And then they would have to shift back to less risky loans. I think foreclosures are up on the good loans - you can imagine what the figures look like on the subprimes. But they had a good ride.

I was lucky to work for a kind of honest lender. But I have seen what people are charged in fees by a lot of other lenders. It is just awful - and people fall for it because they just don't know better.

Or they feel forced to sign because they weren't shown the final fees and interest rate until the day they closed. That scam is pretty common around here. They are shown one good faith up front - and it is estimated. Then they come to closing and find out that everything has changed. They can either walk away from the closing - wich is what they should do - or they can sign. Depends on how bad they need to get moved into their new house.

[Gormy Cuss]

24. What's appalling is that the people who can least afford it get screwed the most.

When we went for a primary mortgage I argued with the SO because I was willing to walk away, he wasn't because he didn't want to lose the house.. We weren't in the subprime market and had the kind of solid profile that made us good candidates. We had a lawyer working with us, something that's rare in California. Neither the broker nor the title company was happy about that but the small amount we paid for the lawyer paid back threefold. Most first time buyers can't afford that luxury.

IMO, the lenders need to be reined in when the loans are issued for primary residences at the low end of the price range. The reality is that if the lender thinks that you're a high risk for foreclosure it may not be a good decision to "buy" a home but the lender has no obligation to do anything but protect their own profit potential. If it's more expensive for the lender maybe they'll think twice about issuing notes with so much risk of foreclosure a few years down the line.

[midnight]

45. Hi leftyladyfrommo, I really don't want to be charged

the thousands of dollars in fees to get a state va mortgage loan. Any advice on how to get the fees in line that would be reasonable?

[leftyladyfrommo]

60. The VA only allows certain fees. Not like non-govt. loans.

You just want to be careful with the interest rate and the origination points. You should never pay more than 1 or 2 points unless you are specifically paying points to buy down the interest rate.

The VA also only allows lenders to charge a certain amount for appraisals. And they are pretty strict on all the other allowable fees.

You really shouldn't ever pay over 1200 (in that ballpark) for fees.

If you think you are being overcharged contact the nearest VA office and ask for help. They are more than happy to assist Veterans and answer questions.

[rcdean]

9. This headline is somewhat misleading.

It gives the impression sub-prime lenders' problems are coming from defaults and foreclosures on high risk loans. I don't buy it. Lenders almost never lose money on mortgage loans because there are so many protections built into the system, like mortgage insurance, appraisal requirements, etc. The worst that usually happens is a foreclosing lender may need to take title and sit on a piece of real estate for a few months until it can be resold at a price that gives them a profit or at worst minimizes their loss.

The only reason sub-prime lenders are having problems is because of the downturn in the real estate market which means they have fewer new loans to process. Processing new loans is where they make their money. The fees are stupendous.

Sub-prime loan rates are also outrageously high. That's what people go by. So people buying now will go to the conventional lenders where they get better rates. Those lenders will liberalize their requirements now because they need the business during the downturn. So they're pulling biz away from the subprime predatory lenders. Liberalized lending policies and lower rates for poorer credit risk people are good things.

Another misleading indicator these days is the boost in the Dow. Imo, it's almost certainly due to people pulling out of real estate investments, because of high rates and uncertain prices, and putting their money into the stock market where it is more liquid.

Rates are too high at most lenders currently, both for mortgages and lines of credits. High rates are the principal reason for the real estate downturn.

So look for rates to drop in the near future, once conventional lenders run low on qualified customers. Then look for the real estate market to pick up, and the stock market to fall.

Fwiw.

[matcom]

12. WRONG

i WORK for a mortgage company and we just lost 5 loans (closed, signed paperwork) to MLN

their subprime bottomed out and they lost their tradelines. our MLN rep said he personally had 5 loans just last week that defaulted on first payments.

subprime killed them

[leftyladyfrommo]

13. Subprime was supposed to be the big game in town.

But anyone with a long history in loans knew that it would fail - eventually. Too much risk.

[matcom]

14. yup

word on the street is there is at least 1 other major lender heading down this path.

as I type this, MLN is meeting out in Colorado with Lehman Bros. (sp?) to see if they will bail them out.

[MsUnderstood]

15. what is MLN?

n/t

[Wcross]

18. MLN=Mortgage Lenders Network USA. n/t

[jschurchin]

19. Mortgage Lenders Network

[rcdean]

32. You're confusing subprime with high ltv loans

The problem with losses on foreclosures rarely come from pure subprime loans with conventional ltv ratios.

See my post below.

[Wcross]

16. In what way is it "misleading"?

The story is about two sub-prime lenders folding up their tents. Also, read the entire article as the posting rule prohibit posting the entire article.

Snip "Meanwhile, some lenders have been pinched by being forced to buy back loans they sold because of rising delinquencies, and as "warehouse" lenders pull credit lines, analysts said."

snip " The firm, however, said wholesale market conditions have "deteriorated dramatically" in the last two months"

[rcdean]

31. It depends on what the meaning of SubPrime is.

SubPrime lenders are those who lend to people deemed to be hight credit risks.

But some also engage in excessively high loan-to-value ratio mortgages. Some loans even exceed 100% of the home price in order to cover closing costs!

The credit industry generally plays fast and loose with credit rating standards, often downrating minorities and who knows who else for who knows what reason.

There are huge incentives to push people into the subprime market. Kickbacks and big fees are par for the course. Home buyers are not familiar with the market, so if a lender or realtor tells a person with a 670 credit score that they have to go subprime and pay an extra 3% or so per annum and god knows how much up front, they tend to believe it.

But these people are often damn good credit risks and usually are laying down a nice chunk of their own change (or their parent's) to buy. They are highly unlikely to default. And if they do, there is built in equity to preserve the lender's position. Unless the lender was stupid enough to loan above 95%.

This article--by talking about floundering "subprime lenders"--creates the impression that the problem is with subprime loans, when actually--I'm willing to wager--it's with excessively high loan-to-value ratio loans and with--as someone else pointed out--those outfits who engineer second mortgages as part of the package.

That kind of lending is very risky and, imo, foolish. Investors get what they deserve.

But let's not blame the problems these lenders are having on the 70%, 80% or 90% loans they make to people deemed to be high credit risks but who in actuality are minorities or buying in the wrong part of town or self-employed or politically prominent in the "wrong" party.

[Tellurian]

33. True..but not altogether accurate as to what is happening now..

Just got off the phone with an account executive...

My post right here is pure accuracy:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=2673676&mesg_id=2673958

[rcdean]

47. I still see no evidence that the problem is sub-prime credit loans... ...

as opposed to excessively high l-t-v loans.

[Tellurian]

48. The primary problem IS job loss..

If you've lost your job and remain unemployed; you will default on your mortgage
and be subject to foreclosure.

Our educational system is deficient in teaching finance in high school.
And common sense is not too common these days.

[rcdean]

52. That's NOT what this is about. This is about failing subprime lenders.

We do NOT have anything like an historically high rate of unemployment.

And the failure of these particular mortgage lenders is NOT a result of false reports of an alarming rate of foreclosures. Nor is it the result of lending to people with less than superlative credit ratings.

It IS the result of dumb, excessively high (>95%) LTV loans, and, to some extent, VRMs as well.

Today's level of foreclosures is relatively modest by by historic standards.

That means that this failure problem is isolated to those lenders whose practices have been irresponsibly risky, because they've been geared to making excessive profits from ridiculously high interest rate and high placement fee loans.

We are NOT in a foreclosure crisis.

Here's what the Mortgage Bankers Association said in Oct 06 according to the WSJ as reported in RealEstateJournal.com:

(The) Mortgage Bankers Association... reports the number of U.S. households late on mortgage payments fell slightly in the second quarter, but that a modest rise in delinquency and foreclosures is expected going forward.

The delinquency rate for residential mortgages was 4.39% in the April-June period, down from 4.41% in the previous three months, the MBA said in a survey that included 42.5 million loans. Home mortgages in foreclosure made up 0.99% of total mortgages at the end of the quarter, up from 0.98% three months earlier.

The MBA expects further cooling in the economy and the housing market, which in turn could lead to "modest increases in delinquency and foreclosure rates in the quarters ahead," said Douglas Duncan, MBA's chief economist and senior vice president of research and business development.

Link

(Note that the 4.4% delinquency rate is for loans in default and is not the same as actual eventual foreclosures. Foreclosures are still under 1% of all mortgages. So more than 3 out of 4 people who fall behind get caught up before foreclosure. In recessions of the past foreclosures have been up in the 3%-5% range as opposed to today's 1% range.)

[Tellurian]

59. Sub-prime lenders aren't failing. They are restructuring for the onslaught

of Foreclosures forthcoming within several months. (March/April)

They are revamping their guidelines getting set up to service investor accounts.

Some of the Parent companys are closing their sub-prime divisions doors and writing off their losses.
Some of the Parent companys while maintaining the existing accounts are merging their sub-prime
divisions with bigger banks.


The unemployment rate is way higher than what government statistics are showing.
After people's unemployment expires and they can no longer collect. They are dropped
from the aggregate numbers figured into the quarterly published statistics. So, what
your seeing as the current rate of unemployment is actually a skewed number and totally inaccurate.

All it is IS common sense. If you can find gainful employment that covers your monthly
expenses, including your mortgage pmt... Your delinquencies could force you into foreclosure.

Some sub prime and Alt-A lenders are lending up to 95% for Refis and 100% for investors with
credit scores of 660+ and above.

This is not rocket science. Lenders are devaluating property values by 10%-15% to sharpen their
edge. This is hurting consumers by losing the equity they thought they had, if they chose to sell
or refi their property.

[flamin lib]

20. I think rcdean is pretty close to right.

These "lenders" are usually brokers who don't actually lend money, they make the arrangements for investors to lend. They usually shop a transaction to half a dozen lenders for the best rate of return on the closing costs. As the market gets tight they can't find the investors so even if there were applications they can't close the deal.

What happens to the investors is another story. There is some protection from mortgage insurance but that only covers 80% of the loan. A lot of the sub prime loans are "80/20" splits. 80% of the value is first lien and 20% is high interest 15 year note for the balance. This allows the buyer to borrow 100% of the purchase and it keeps the payments below the cut-off point (no PMI to pay). It takes a high risk loan and adds two more levels of risk--buyer is upside down and there is no insurance on the loan. When a default happens the only recourse for the first lender is to take the property. The second lender is SOL unless the property is sold for more than enough to satisfy the first lien and all costs. That usually doesn't happen until the loan is older than 10 years. Most of these foreclosures are two to three years old.

There are no winners in this scenario. Buyer's credit is screwed, investors will never recover loan and costs and all those brokers are out of work and going belly up.

When the real estate market crashes it's like a snake eating its tail.

[matcom]

23. MLN IS a direct lender

not a broker

[flamin lib]

27. Yes, but I was trying to address a larger issue in the lending

industry. MLN just has a double dose of the bad news.

[Tellurian]

28. Yes, your assessment is...

dead on correct. What is happening is most of the sub-prime lenders have a parent company
such as Morgan Stanley, Lehman Bros and the like. The parent companys are closing up their
existing sub-prime lenders for a heavy duty restructuring of their lending guidelines.

The changing market consisting of voluminous foreclosures dictates a full restructuring of
how business will be done with a gold rush of new investors. These same parent companies will
reopen under different trade names but it will be business as usual for investors who have
been patiently waiting for the other shoe to drop.

For mortgage holders standing still and not following along with the changing trends. It will be,
sad to say, dark times for them.

[flamin lib]

21. delete-dupe, clicked twice on submit

[BluePatriot]

17. The home/construction industry, autos, factories, manufacturing...

What jobs are left? Retail clerks and cubicle farms? I do see a bad downturn coming...

[CoffeeCat]

37. Does anyone know....

...if this is a general trend for all subprime lenders?

Or are subprime lenders in certain parts of the country suffering more than others?

Thanks so much for any information.

I've appreciated reading this thread. Many of you are very astute, and I value
what you've shared with the board on this topic.

[femrap]

38. There's the theory going around that all of

these sub-prime mortgages are being bundled and sold off to Hedge Funds who are using them as leverage so invest more in the stock market.....man oh man, when this house of cards starts to fall, it's going to be amazing.

Anyone here know the best way to invest in 'Puts' to take advantage of the coming collapse of the stock market?

Thx.

[AnnieBW]

41. Frakking sharks!

I've had enough dealings with Wells Fargo, who kicked us to sub-prime when my husband lost his job and we started missing payments. Those people are EVIL BASTARDS who care nothing for the people that they're screwing over. And they use illegal means to do it, too. We spoke to a private investigator for our mortgage insurance company, who told us about cases of forgery, holding on to survivor benefits, etc. Bastards.

[Deja Q]

42. So what happens when the economy does break? n/t

[Tellurian]

44. Start now..

stock piling canned goods and water.
enough to keep you going for a month or so..

[Kingshakabobo]

46. Heh. What a coincidence..........

I'm a mortgage banker/broker. I just heard about this today.

Not only did MLN go out of business. They did it while one of my co-workers had a loan in escrow. The loan was approved and closed. They failed to wire money, on the day of closing, with the promise that they would wire funds the next day. When we called to follow up, they gave us the bad news they went under.

I guess it made for a sticky situation for the borrower.........moving truck all loaded up and all. I'm sure this isn't the only customer that got screwed. My boss, being the Mensch that he is, funded the loan with the hopes we can sell it to someone else. I'm sure most brokers didn't accommodate - it's nice working for a liberal!

[FreeStateDemocrat]

49. Couple has abandoned an entry level house in my neighborhood, just bought in April.

I was told they turned it back to mortgage company and bailed out. I thought this was more difficult to do under the new bankruptcy law but the house is stripped and empty, never even tried to sell it in a depressed market. It is probably worth about 10% less now plus costs of sale.

[hippiechick]

58. I've seen many similar here in Indy ..

... in fact am hoping to be able to buy one soon.

Simply adorable bungalow, built in 2000 - everythings still under warranty!
It was on the regular market in Sept for $89k - out of my finance range - but I saw it
yesterday on the HUD foreclosures site for $72k.

Sad that this happens to people.

What I don't understand is why they make it so easy and attractive for people to build brand new -
"zero down, we pay closing costs, you get tax credits, etc" - when the market is just flooded with existing homes that maybe only need a little TLC but are in prime established locations? I've had realtors etc practically try to force me to build new rather than let me look at older houses (which I prefer).

:shrug:

[moroni]

51. Not all sub-prime mortgage lenders are the same...

Novastar Financial Inc, is one of the best if not THE best in the subprime mortgage business. Subprime also means unique loans for unique situations. I think the vast majority of these loans are for credit card debt reduction. NFI has a program to help find jobs when a borrower looses one. They are very conservative.

www.novastarmortgage.com is the company's website.

The shareholders website (that's right SHAREHOLDERS) is www.nfi-info.net.

Want to learn about more about YOUR market? Go to www.ncans.net and www.thesanitycheck.com.


moroni

[rcdean]

53. Thanks for the info, moroni.

Also thanks for the links to info about naked shorts.

You're an angel ;-)

[moroni]

54. Hedge funds, naked shorting, FTDs

You are welcome but I am just the messenger O8). Everyone that invests needs to see these sites and write letters to your "leaders" in congress as well as your state legislators. The blogs are a great source of information. Add your voice and make a difference.

Blessings to all,

moroni

[moroni]

55. One more website of interest....

www.investorvillage.com

Good website. Go take a peek if you haven't already. Free too.

Another good website (pay) is www.valueforum.com. Front page is readable without subscription.

moroni