Mortgage Times

[bparker]

Yea i know it depends on the area in which you live... as in Texas was recently listed on the on top10 realestate hotspotes in places Dallas, Auston and Houston made the top 10 list...

I hope we dont see a down turn here as we have alwasy pretty much escaped the others that have occured in the past..

[mikejr]

I specialize in marketing foreclosures in the western PA area and the foreclosure rate keeps climbing. We've gotten the attention from investors from all over the country buying up the foreclosures in the area. In general foreclosures are up all over the country.

From what we can see the high foreclosure rates are due to very liberal lending guidelines on the prime and subprime origination market. Normally the foreclosures (f/c) are in the bad neighborhood and in the low value properties. In the past 12 months we've seen more high end homes coming into f/c and onto the market.

Many of the high end f/c are interest only and ARM loan products which tend to have increasing payments.

I've seen people getting loans to buy houses that couldnt afford to buy a stick of gum on time. These same people never make a single payment and go into f/c in months.

Sure there are other reasons for f/c that include job layoffs, declining values in the area, death or illness of a spouse etc... but in my opinion its the lenders themselves that are to blame for lending money to people that dont have the ability to repay it. I've seen origination appraisals that appraised a home worth $30K at nearly $100K just to make the loan work.

We've seen loans with silent 2nd mortgages that fraudulently induce the primary lender into the loan thinking they have an 80% LTV when in fact they are in a 100% LTV position since that 2nd mortgage is never recorded and is bogus.

This commentary is not meant to attack anyone in the lending industry, but merely my observation of the state of the f/c industry in the US.

That's a few of the worst case scenarios for sure.

[Adam in CO]

I'm sorry, I fell out of my chair, hit my head, and have been unconscious for some time. It appears that we're actually having logical dialogue on the Elcova site.

I think that fraudulent lending, or even irresponsible lending (brokers, lenders, title companies, everyone) has led a major piece of the foreclosure market in the US. I see a few clients from time to time that have been victimized and stuck two or three or even five years later when someone finally tells them to call me. In fact, I am testifying Monday to the Colorado House Business Affairs Commitee with a client who was defrauded by the broker, lender and title company on his transaction. You would not believe how many people allowed this type of predatroy lending to go on. With a senior citizen, no less. It ended up costing him his house, his borrowing power, and a ton of dough. Senate Bill 249 focuses on a very blanket-like regulation over most involved parties. The state has also been very big on appraisal fraud and the FBI has opened a separate mortgage fraud office in Denver.

Denver, however, is also truly struggling with a real estate depression. The real estate in this metropolitan area has been very predictable to big public works projects. Our last great boom was when they announced our big highway development project with commuter trains called T-Rex. It has been completed and fully operational since November. Before that we build this great, big, shiny new airport to the tune of seventy-ga-jillion dollars or something ridiculous. It is a beatiful facility, and the real esate was HOT.

All we need is for someone to build us a fancy new something, and we're golden!

[mikejr]

Yup appears we're having a logical intelligent conversation on here.

It is amazing the things we've seen, and i've talked to appraisers that have flat out told me, we get pressure from the lender to make the deals work....ie....fudge the appraisal to make the loan.

Some of the worst are the deal that involve mobile homes, in the past quarter, I have had two foreclosures that were double wide mobile homes but on the origination appraisal they said they were single family detached with FULL foundations. Both of these were on piers with skirting around the base.

It appears to me that the sub-prime industry is the worst for fraud and fudging things. We've had broker's call us and ask us to "doctor" up the price in the multi-list so they could get their deals to work. When I told them it was fraud, they had the balls to tell me....oh we do this all the time...its ok...no one gets hurt. My response was fraud is fraud no matter how you try to spin it or sugar coat it.

I am a licensed individual and make a very good living at what I do, aint no way i am going to risk it over a commission on a deal.

What do you do Adam that you are testifying?

[bparker]

Wow!! Thats outrageous! Now I think I can see what really going on here. I guess I should be safe and happy with any market correction as the house I bought last year; I was able to get it for about 35k under appraisal value and we used an independent appraiser.

[Adam in CO]

I own a real speculation and finance firm in Denver. Lots of real estate invesments and mortgages, etc., but it really has nothing to do the Senate hearing today.

I was approcahed by a sub-committee member who asked how many clients I have that had been burned over the years (a lot) and if any of them would testify and it led to whether or not I would testify, so I am. On a number of bills, actually.

It should be an interesting afternoon.

Scheduled for HBAL 1:30 Monday 30th, it is
1:30 p.m.
Room 0107 Business Affairs & Labor
SB 085 Massey--Protect Consumer Real Estate Transaction
SB 203 Marshall--Mortgage Broker Licensing
SB 216 Marshall--Mortgage Loan Fraud Acts Practices
SB 256 Madden--Uninsured Motor Vehicle Insurance
SB 249 Rice--Real Estate Title Escrow Settlement Serv
SB 123 Kerr A.--Regulate Conveyances & Mechanics
(for action only)

[MarineHawk]

Originally Posted by mikejr

Yup appears we're having a logical intelligent conversation on here.

You're right. Damn! We need some AEs to ride in like the cavarly and derail this thing before it gets out of control!

[mikejr]

well i've started to see some loan terms going out as far as 40 years new instead of the gold standard 30 year loan. Seems like lenders are coming up with new products to allow people to "afford" buying a home.

Look at the interest only loan products. Those are great, but when people use them to buy a house in an appreciating market which suddenly goes in the crapper, they now have a principal balance over what the property is worth....they need to sell for whatever reason....and cant...they just owe too much....so the property goes to f/c.

As to how a person can get a loan when they just got f/c on I havent a clue. I know this particular person put about $20K down, so maybe the b/c lender felt it was a good risk. I havent a clue. I've always protected my credit rating like it was the launch codes to a nuclear missle. There are people out there that could give a crap less about what their rating is.

You know i've always wondered what the repo rate was on vehicles. I would guess it has to be high. When I go in to buy a vehicle, there is no income verification, they ask what i make and check credit and I sign my name hand me the keys and off i go. Now the probability of someone with perfect credit defaulting is slim, but i wonder how many people with less than perfect credit walk in...sign and drive home with a new car?