Wednesday, August 15, 2007

Trouble in MortgageLand

There has been a lot of press in recent months (heck, years) about the stagnating (heck, dropping) prices of residential real estate.

Well, that was bad but not as bad as the current state of the mortgage industry, in my opinion.
Here's a snip from a story on Marketwatch.com:
Several lenders such as American Home Mortgage Investment Corp. and New Century Financial Corp. have already filed for bankruptcy after facing margin calls. Now, other mortgage REITs such as Thornburg Mortgage Inc. and NovaStar Financial Inc. are struggling to survive.

Struggling to survive???? Some big, publicly-traded, reputable mortgage companies are "struggling to survive"? These companies don't do just the sub-prime loans, either.

This shakedown could get bad, and could affect all of us in a really dramatic way. If the bigger mortgage companies start to go under, or if it becomes more risky for investors to buy mortgages, it becomes more expensive for banks and brokers to sell mortgages. That means rates and fees could increase for everyone.

All I can say is if you are a buyer on the fence, not sure if you should buy or not, I will tell you that rates aren't going to get any better.

There's also a good story on this topic at WSJ:
http://online.wsj.com/article/SB118713766031197962.html

And Bankrate.com always has great articles. They have one about a tough situation: if you were preapproved and the lender goes bankrupt. Yikes!!
http://www.bankrate.com/brm/news/mtg/20070607_pre-approval_lender_bankrupt_a1.asp

I think this is going to be a major, major story this fall.



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