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Thread: Sub prime motgage lending

  1. #1
    pampered princess Catwoman's Avatar
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    Default Sub prime motgage lending

    Funny thing, I was out to dinner tonight with a couple. The husband has a business that marks to market on a daily basis (Values) the portfolios of mortgage companies. American Home (AHM ticker symbol) was one of his clients.

    He said they were totally taken off guard at the rapid slide in the companie's portfolio. He surmises he only marked half the portfolio.

    When I told him that 30% of the originating mortgages in our town which is not considered sub-prime were interest only, a light bulb went off in his head.

    Folks, this could be larger than the savings and loan crisis of the 80's or the LDC
    loan crisis.

    Those with cash on hand, stand back to pick up some prime residential properties at the court house steps.

  2. #2
    Veritas Aequitas Atlas's Avatar
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    Default Re: Sub prime motgage lending

    I've always thought interest only loans were like playing roulette. The only exception being waterfront propertry, which seems to hold it's value and is recession proof.

  3. #3
    Running amok Orlok's Avatar
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    Default Re: Sub prime motgage lending

    Who couldn't see this coming? I'm no economics guru, but if you have a whole bunch of people sign up for more house than they can afford when interest rates are low and finance it with a variable interest rate mortgages, it is only common sense that a) interest rates were never going to stay at 2%, and b) if you can barely afford the house at 2%, and you have no equity in the house, you're going to be out on your ass the first time Ben Bernanke sneezed.

    By the way, am I the only one who thinks a no-money-down mortgage is a really bad idea? The wife and I won't buy anything we expect to make payments on without putting down at least 20%. We figured it was common sense.
    "Call it, friendo."

  4. #4
    Veritas Aequitas Atlas's Avatar
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    Default Re: Sub prime motgage lending

    Quote Originally Posted by Orlok View Post
    Who couldn't see this coming? I'm no economics guru, but if you have a whole bunch of people sign up for more house than they can afford when interest rates are low and finance it with a variable interest rate mortgages, it is only common sense that a) interest rates were never going to stay at 2%, and b) if you can barely afford the house at 2%, and you have no equity in the house, you're going to be out on your ass the first time Ben Bernanke sneezed.

    By the way, am I the only one who thinks a no-money-down mortgage is a really bad idea? The wife and I won't buy anything we expect to make payments on without putting down at least 20%. We figured it was common sense.
    Plus 20% is the magic number that lets you get out of the private mortgage insurance scam. A sound judgement by your family
    Last edited by Atlas; 08-05-2007 at 01:11 AM.

  5. #5
    Running amok Orlok's Avatar
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    Default Re: Sub prime motgage lending

    Quote Originally Posted by Atlas View Post
    Plus 20% is the magic number that lets you get out of the private mortgage insurance scam. A sound judgement by your family
    Trust me, that 20% number is no coincidence.

    And the credit goes to my wife. She's got the MBA and the mind for numbers. I definitely married up.
    "Call it, friendo."

  6. #6
    Veritas Aequitas Atlas's Avatar
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    Default Re: Sub prime motgage lending

    Quote Originally Posted by Orlok View Post
    Trust me, that 20% number is no coincidence.

    And the credit goes to my wife. She's got the MBA and the mind for numbers. I definitely married up.
    Heh Heh, I tell my bride I'm a trophy husband

  7. #7
    pampered princess Catwoman's Avatar
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    Default Re: Sub prime motgage lending

    Quote Originally Posted by Orlok View Post
    Who couldn't see this coming? I'm no economics guru, but if you have a whole bunch of people sign up for more house than they can afford when interest rates are low and finance it with a variable interest rate mortgages, it is only common sense that a) interest rates were never going to stay at 2%, and b) if you can barely afford the house at 2%, and you have no equity in the house, you're going to be out on your ass the first time Ben Bernanke sneezed.

    By the way, am I the only one who thinks a no-money-down mortgage is a really bad idea? The wife and I won't buy anything we expect to make payments on without putting down at least 20%. We figured it was common sense.
    Exactly,on all points.


    If we burn and crash, we will still have substantial equity in the house.

    That said, our goal is to pay the mortgage off.
    We live in a high real estate tax area, this coupled with high deductions for our mortgage and state taxes, we are always forced into the alternative minimum tax. (AMT) So we pay 8k more than the average citizen at our tax bracket.

    So it no longer makes sense to carry the mortgage that we can no longer deduct,

    The ATM was designed to stop major tax dodges, not 1099 wage earners, like me and you.

    Tell Senators Schumers and Hillary Clinton to go fuck themselves. They use NYS money to fund their programs elsewhere at my expense.

    Tell hillary to go back to her hick roots in Arkansas and Illinois.

    She in particular has not done one iota to help New York.

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