You’ve been hearing a lot of rancor about subprime mortgages, haven’t you?
It so happens I work in that field. I own a mortgage business. I’m a licensed mortgage broker. I have 26 loan agents working under me. I deal with subprime borrowers and lenders every day of the week. Hell, I teach mortgage finance at real estate school.
I can say with certainty that if you actually *believe* the liberal Democrat media’s apocalyptic headlines about subprime mortgages you need to take a step back, take a deep breath, at least postulate taking a Xanax (or two), but most importantly you need a reality check.
As of last quarter 99.5% of all home loans in the country were *not* in the process of going through foreclosure. 95% of home loan borrowers were *not* behind on their payments. 87% of subprime borrowers were not in arrears.
Does this mean I’m contending there are not any problems?
Um, no. Of course there are problems in the subprime markets. Duh.
But the liberal media once again has jumped the shark.
Near the end of that six-year real estate sales and mortgage lending boom overzealous wholesale lenders began handing out subprime loans to people with horrible credit scores, weak incomes, and no savings – in other words, people who shouldn’t have been allowed to borrow money for a car, much less to purchase a home. Sure enough, a whole slate of those borrowers have fallen behind or entirely stopped paying back those loans. Shocking, huh? Yep. That should be as *shocking* to everyone as high relative rates of homicide, suicide, poverty, crime, student dropouts, unemployment, and teen pregnancies, along with low student test scores, in big liberal cities controlled for decades by liberal Democrats.
Early this year the investors that make up what’s called the “secondary” mortgage market finally grasped the fact that dishing out 100% financing to people with ghastly credit scores is not exactly a brilliant idea. So, ergo, they tightened up their standards. The secondary mortgage market is where home loans are purchased from the primary lenders whose travails are causing media liberal-bots to froth at the mouth. When the secondary market participants tightened up their standards a liquidity problem arose for numerous primary lenders, most particularly the subprime lenders to which references were made above. Several of those companies have ceased lending operations.
So far the most notable failures have been Fremont Investment & Loan and New Century Mortgage. In the greater scheme of things, however, Fremont and New Century imploding is analogous to Lichtenstein declaring war against Luxembourg. Seriously, we’re not talking here about Bank of America or Wells Fargo. Not even close.
Here are the bottom lines:
If you have really bad credit, from this point forward you’re going to have to (gulp) pay down in cash at least 5% of the purchase price of your next home. (Oh, the humanity.) If you have really bad credit and no savings whatsoever, you’re going to have to (gasp) remain a tenant.
If you’re planning to sell your home, you’re going to be facing a soft market for the next year or two.
If you’re one of those people who fecklessly purchased a home that was too expensive for you then hopefully you’ll learn your lesson.
In 2-3 years, the media’s self-proclaimed and utterly-banal “Mortgage Tsunami” will be such ancient news the malcontents and zombies who make up the “Fourth Estate” won’t be able to tell you the difference between New Century Mortgage and the Ramones’ “End of the Century.”