There Are No More Mortgages

[berni_mccoy]

I've been monitoring the mortgages available on bankrate.com. Two weeks ago, if you searched for a 30-year mortgage, there were pages upon pages of mortgages available.

Now, with the credit crunch, there are only a handful, mainly supported by Bank of America and Quicken Loans. And the interest rates on these mortgages are about 1.5-2 points higher than they were even though interest rates haven't gone up.

This is because there is not competition for these mortgages. While the demand has gone down on new mortgages, the supply has all but dried up.

Even if there were buyers in the market, they are going to be extremely limited in what they can get and they better have the downpayment to afford the mortgages that are available. While this may be a "correction", it's going to not only slow the economy, but prevent it from restarting. In other words, even a defribulator won't get it going.

This is why Congress needed to act now and why the bill must pass to inject new capital into the financial institutions. Without it, we are truly headed toward a Great Depression.

[bunnies]

1. No kidding.

I'd have been better off taking one of those shitty mortgages. At least I'd be IN a house right now. Instead, me & mr. bunnies acted responsibly, and what do we get in return? A bill for other peoples bad loans... and no chance of EVER owning a house ourselves.

Awesome.

[Extend a Hand]

10. you prospects might actually improve

House prices are MUCH lower than they were 2 years ago and are likely to go lower still. You'll soon be seeing seller financing available. I'm trying to sell right now to move closer to family that needs help. I'd consider holding the mortgage for the right buyer.

[bunnies]

17. Thats what we're hoping for.

Though, believe it or not, house prices in our area havent really come down at all. But we are starting to see some owner financing options... and some really good lease / option deals.

Right now, we're just waiting for the bottom (or near bottom) of this drop. We dont want to lose a big hunk of cash right off the bat.

[medicswife]

26. How do you go about that, and what kind of precautions would you

take to protect yourself if the buyer ended up not being a responsible party? I ask because my husband and I own a house in Oklahoma where he was last stationed, and since we had only been in the house for 8 months when he got orders here to Ft. Campbell, we had to rent it out. We went through a Property Manager, but ultimately, that didn't matter because not only did we end up having to file for eviction, the tenants destroyed the carpet and caused other damages totaling over $5,000. That money that we're having to spend to repair the house was supposed to help us lower our credit card debt, plus we've been having to pay the mortgage for the last three months on top of trying to afford to get the work done. Of course, since the credit market is so screwed up, we couldn't get a loan to just get the work done quickly. So, the house was left vacant at the end of June, full of trash and the tenants discarded belongings, and it's taken 3 months to finally get it to where we can either try to sell the damned thing or put it back on the rental market. My husband and I have vaguely discussed holding the mortgage ourselves, to try to get it sold, but we know absolutely nothing about how that would work.

What a mess. I have really mixed feelings about this bailout, I have good enough credit that I should have been able to get a loan to fix the house up, so I know that the credit markets really are screwed up right now.

[billyoc]

2. Always with the negative waves, McCoy. Your house will be so cheap soon you'll be able to

sell it without a mortgage. But you never mention THAT, do ya! :evilgrin:

[berni_mccoy]

11. LOL!

Thanks Billyoc! You always brighten my day! :D

[LynneSin]

3. I am so glad I got my house a year ago

I was able to secure a good rate that is fixed.

If I wanted to buy a house today I highly doubt that I could

[CoffeeCat]

4. We're headed toward a Great Depression...

...anyway.

Main Street has not been addressed. Consumers hold the economy in their hands, and they no longer
have the credit to prop up this artificially bloated economy.

Hello, massive spending contraction that will cause unprecedented unemployment, business failure and
suffering.

Yes, I said, "unprecedented."

[scheming daemons]

9. No...we're not.... if we open up the liquidity, we can avoid a depression..... You don't get it

Pass the bailout = 6 month recession

DONT pass the bailout = 5 year depression



Get it?

[Extend a Hand]

12. How does liquidity help when the problem is insolvency? n/t

[CoffeeCat]

19. You're the one who doesn't get it...

I'm not saying that the bailout won't help at all. It will. However, that help does nothing to
alleviate the impending disaster on the Main Street side of this crisis.

The bailout will make funds available.

However, moving that money is contingent upon consumers and businesses using that money. Do you actually
think that consumers and small businesses are in spending mode?

If you actually think that the impending contraction of spending--on the Main Street/consumer side---won't
affect our economy at all--then you're living in some kind of bizarre universe.

Our economy has been propped up by credit-card spending and home-equity loans. That's all ending.

That's a fact. We can argue about the exact effect of this contraction--but there is no doubt that
this massive decrease in consumer spending will devastate our economy.

[scheming daemons]

21. The election of Obama, among other things, will spark optimism..which will open up spending...

But if McCain is elected, you are correct.

[progressivebydesign]

24. People underestimate consumer confidence.

It plunged when Bush stole office in 2000, and again when it took office in 2004. It often drives the economy, and an Obama victory is going to do things for the economy that ten Paulsons could not.

[scheming daemons]

29. You are right.... Obama win = increased consumer confidence.... McCain win = decreased

[CoffeeCat]

25. You're scaring me...

Look, you'll find no bigger Obama fan than me. I'm one of his precinct captains, and I've
been with him since the early days of our Iowa caucus.

Yes, he will give us hope and he'll definitely be a steadier hand during a crisis.

However, the inevitable contraction of consumer spending--will happen no matter who is President.

I'm actually concerned about you, because you don't see this. Are you totally living in a fool's
paradise--unprepared for really dire economic circumstances? Are family members counting on you?

You'd better get your head in the game.

It's a fact that the massive increase of consumer spending and new businesses--has been due to
consumers buying things they could not afford--with credit cards. Spending was also propped up
with consumers using their homes as ATM machines--and taking out easily obtained home-equity loans.

That's all gone for the most part! Don't you get it?

Those credit cards are maxed out. That financial fad is done. People are worried and they are
hoarding money and paying off those credit cards.

Those who spent money like drunken sailors--now have hangovers.

This equals major, catastrophic spending contractions.

Please educate yourself. Otherwise you are vulnerable.

[scheming daemons]

27. We are in hyper DEflation right now ... look at the housing market....

The bailout is needed.


You are right...because Americans will tighten up their spending, we are headed into a recession either way.


But they will tighten it up EVEN MORE if the bailout fails to pass and if McCain is elected.


Passing the bailout and electing Obama will make this a 6 to 12 month recession.


Killing the bailout and electing McCain will make this a 10 year depression.

[progressivebydesign]

20. Respectfully, I wish people here would research what a Depression really is..

before throwing that term around so loosely. The day you drive by Target and the parking lot is empty, you might have a case. But we may very well be headed into a Recession. When people are lined up in soup lines in middle class neighborhoods, instead of lined up to buy a new iphone, then we might be in trouble.

Also, the media loves to use the term the "crash", and "bank failure" when in fact what they're discussing is nothing of the kind. A bank that is bought out by someone else did not fail -- they got taken over. The ones that the govt seized, would qualify.

[CoffeeCat]

34. I would argue that...

...the Target parking lot is currently being emptied out.

Target's sales are down. So are home-improvement stores such as Home Depot and
Lowe's. Consumer spending is slowing across the board. This is due to the
initial stages of a massive spending contraction. It will only get worse.

Hey, I agree with you--maybe the word "Depression" shouldn't be thrown around
as it is. I think maybe we should come up with a new word--because I think
this financial disaster will be totally unique.

I'm no economist, so I don't know exactly what happens when the main source
of energy--that fuels our economy--is drastically reduced. So maybe others
who have PhDs in economics and finance can enlighten me.

Tell me, please. What happens when a major economy is bloated and propped up
on credit-card debt, home-equity loans and financed trinkets from major retailers---and suddenly
people stop those spending habits????

Because, that's exactly what his happening in the United States right now.

The loss of dollars from the US economy--due to consumers decreasing their credit-card use and
other borrowing--is pretty much unprecedented in American history, isn't it?

We can argue all day long--about what label we should slap on this...recession...depression...catastrophe...crash.
What matters is that a major contraction is starting to happen, and will continue.

[dipsydoodle]

5. One of the reasons

that the rates are higher is because some mugs believe that a higher rate will reduce the risk of default. Higher rates rates do not make bad deals good.

[1corona4u]

6. Yep. less banks, Less competition. Less choices for americans.

My bank is now in the hands of a financial company that I HATE. Citygroup.

[mmonk]

7. Yes, it's about credit flow. Without it, economic activity will grind

to a halt. It's what all the amateur economists in the public don't understand. I'm not saying I support this package but action is needed immediately.

[CTyankee]

8. I'm still getting calls to re-fi, only not as many.

We have sterling credit, tho, and we live beneath our means. Which is good because now it takes everything we've got to keep afloat...

[Blackhatjack]

14. I am still getting mailings from WaMu .... solicitations don't always pan out.

These solicitors are being paid to bring in the leads. They know nothing about whether the entity which hired them is actually making loans they are promoting.

[SDJay]

13. I've been working on a mortgage as well...

and my broker just spoke to me a minute ago. Interesting that this thread would be here. He told me, in no uncertain terms, that he would not advise me to take any mortgage that's available right now. They are all going to come at a premium, meaning that even with good credit I'd be paying points and substantial fees. His best 'guess' is that next summer would be the next best time to get into this, as between now and then there's an election and it's almost certain that the banking code and relevant laws are going to be almost completely rewritten. As of now, the few banks that have money to loan are in full-on CYA mode, which is why the mortgages are pretty much priced out of the realistic buyer's range right now. This is especially true in San Diego, where a decent home will run you about eleventy billion dollars. Guh. Main Street, here you go. Thanks, Wall St. thieves.

[progressivebydesign]

23. I'd say that you need to talk to someone else PRONTO about that...

Do not take the opinion of one broker on that. The mortgage industry has been hinting that interest rates will be over 8% after the election... I would NOT hesistate to get a mortgage now. The rates are ridiculously low now, and any fees or points you'd pay would be a drop in the bucket compared to an interest rate that will last the life of the loan.

Please get a second opinion. I just closed a mortgage two weeks ago and there were no exessive fees nor points that I had to pay. The only bummer was that the interest rate plunged 1 1/2 points the day after we got the keys!!!!

Unless you have a particular situation where you have to do a creative or subprime mortgage, I encourage you to do more research before you accept what that person told you.

[SDJay]

28. Thank you, and you're right...

I have put out feelers to other brokers, as my CPA just told me that many of these folks are tied to certain lenders, so that's going to happen at some point today when I get return calls. The 'X factor' is that I'm a small business owner, and while the business is on very solid footing and the risk of implosion is very small, it's only been in operation for three years, so the bank sees me technically as 'self-employed,' with lots of personal guarantees on business assets and the like. So in a way, I'm not a 'typical' borrower in terms of having a W-2 and not much tied to my name, even though everything is in good standing, etc.

I do appreciate the feedback, though.

[yodoobo]

15. That will depress housing prices further

If you cant get a mortgage, you can't buy a house.

If people can't buy houses, they can't sell them either.

With no market, housing prices will continue to fall and the mortgage market will just get tighter.

its a bad death spiral.

[mmonk]

18. Yes, housing is what they need to address.

Therefore, they should do something more broadbased in that area and not just liquidity injection.

[Tatiana]

16. This is so sad. Newlyweds just starting out are going to have a hard time for the next year or so.

I really hope we can get this economy going. These are tough times.

[berni_mccoy]

22. well, they can rent, but that means they are not building equity...

which means they aren't saving and have to be very careful about their spending. That in turns means lower consumer confidence (lower than it's at) and a cascade into a depression.

Sad for new time homebuyers for sure, but very bad news for the economy.

[krabigirl]

30. We just bought a house this month, right before the recent crash (lol).

We got a decent rate, and the regular 30-yr fixed/20% down etc. Although we obviously did a fully-documented loan, we were shocked that the lenders were STILL offering no-doc loans!! WTF?! I thought everything had to be documented now. I hope that has changed recently.

[ClarkUSA]

31. That's a bit of an overstated OP title. However, it will ease once the bailout plan is approved.

However, the days of mortgage loans to people with credit scores under 600 is over.

Between 600-700 credit score is a gray zone which doesn't favor the homebuyer unless you have enough for at least 20% down
and have 6 months worth of mortgage and property tax payments in escrow.

Right now, unless you have a credit score over 700, you will not be able to buy a home.

Which is as it should be.

[scheming daemons]

32. That's fine.... no more mortgages to those with low credit scores is FINE

But we've got to clean up this mess right now FIRST.

[ClarkUSA]

33. Absolutely.

We are sympatico on both counts. :thumbsup:

[snooper2]

35. There are plenty of loans available, just call Rodney Anderson

:)

To get approved unlike in the past seven years, you need to have a credit score over 630-640


http://www.rodneyanderson.com/

[ecstatic]

36. Wow. Looks like I'll be stuck here for a while. nt