Sorry I haven't been paying attention lately. What is up with the Market?
2007-08-22 13:52:13 · 6 answers · asked by Jron 2 in Business & Finance ➔ Renting & Real Estate
Crooked has it right.
Lenders usually don't hold the mortgage once you settle on the loan. They sell it to an investor for a profit and the investor collects the interest. Well, now that housing prices are going down and delinquencies are going up the investors have lost money. Therefore they will no longer buy anythig but the lowest risk loans. So, companies that existed by selling high risk loans are out of business. And those companies that don't have enough assets to cover the mortgages that they can't sell have gone out of busines.
So, since 2005 we have went from having financing that was easy....far too easy....way ridiculously too easy to get to having financing that is nearly impossible to get if you aren't in an ideal situation.
Thus, people who were relying on being able to refinance in the future out of the risky loan that they took in 2005 are now stuck in that risky loan and thier payments are going through the roof.
Thats the 2 minute version on the last two years!
2007-08-22 17:57:01 · answer #1 · answered by ii7-V7 4 · 1⤊ 0⤋
Well the playing field has changed. Mortgage companies are no longer writing mortgages for the sub prime market, which is for folks with credit issues. So if you're in the market to purchase a home, the qualifying just got tougher. Othewise,the real estate market sucks!
2007-08-22 20:59:12 · answer #2 · answered by Alterfemego 7 · 1⤊ 0⤋
A sharp rise in delinquencies and defaults for sub-prime and Alt A loans in recent months is what I believe you're referring. Since mortgages are now bundled and packaged into securities and sold in the open market, many investment institutions like hedge funds are holding the delinquent mortgage paper. Since the delinquent mortgages are now mostly worthless, these institutions took huge losses in their portfolios and were forced to liquidate other assets, like stocks, to cover margin calls by investors who wanted out of their funds.
2007-08-22 21:04:43 · answer #3 · answered by Crookedlettaman 4 · 4⤊ 0⤋
There really isn't any mortage meltdown, but there are a lot of people who signed up for variable rates and have had falling house prices and increases in interest rates. That formula results in a lot of forclosures.pp
2007-08-22 21:00:32 · answer #4 · answered by ttpawpaw 7 · 1⤊ 0⤋
Just the latest Chicken Little routine by the ADD-infected mainstream media.
2007-08-22 21:01:08 · answer #5 · answered by Dee B 4 · 0⤊ 0⤋
It's a buyers market right now
2007-08-22 21:01:03 · answer #6 · answered by Kathy 5 · 0⤊ 0⤋