Do you think the mortgage market will correct its self soon or get worse before it gets better?

Answer 1

It will get worse before it gets better. There has just been too much rope given to the subprime market which never should have been given in the first place. So now, all the nervous financiers are pulling that rope back in fast, continuing to upend the housing and mortgage market. Think of it as a self perpetuating cycle: When the market starts pulling its support, no-one is willing to pump any more money into that part of the market. When this happens, demand goes down and prices of the esoteric products created in the mortgage market go down as well. We already see that most subprime borrowers cannot meet their monthly payments anymore and with the market jittery, there is little to no chance of banks being forgiving and holding off on forcing forclosures. Of course this pumps more unwanted homes into the market, increasing supply as demand continues to drop due to tightening credit requirements and higher interest rates.

So no, the market won't likely correct itself soon.

Answer 2

The mortgage market has already corrected itself. Loans are no longer being written for subprime applicants unless their downpayments are so substantial that the lender faces little, if any, risk with a foreclosure.

Of course, the foreclosures on those poorly underwritten loans will continue for some time in the future, until all the financially unqualified folks eventually lose their homes to a foreclosure action.

Answer 3

There is no question that it will get worse as it gets better.

I just heard via fax that Countrywide home loans has stopped underwriting 100% loans...the closest is 80/10/10 now with a minimum credit score of 680/W-2 employee.

That is going to make it harder and harder for first-time buyers to qualify...with subprime lenders going out left and right, FHA and VA loans will start to soar again...FHA and VA loans ALWAYS come back....and they will rise again.

This will cause property values to go down (to compensate for raising rates and stricter underwriting standards for new loans), and rentals go increase.

I would predict about a 2-5 year window....this is the hardest hit that I have seen the business take since I've been in Real Estate....it is anyone's guess of what will happen.

People that are holding their breath for a quick fix....will be turning blue. We aren't talking months anymore...we are talking a few years.

Answer 4

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Answer 5

Well if the futures market are any indicators they are going to get worse. Today the Oil per barrel and gasoline and gas all took a dive meaning that there will be less demand meaning less money. No rocket scientist needed to interpret that one.

Answer 6

Worse!

Answer 7

MADDDD MONEYYY KRAMERRRRRRR