^^^ rigorous 3rd party income verification plus rising interest rates have a way of doing that ...
(snip)Treasury bond yields rose notably all day with the 10Y at its 2nd highest closing yield of the year +5.4bps to 2.98% today(snip).
Since the 10 year treasury bond yield interest rates paid is most closely tied to mortgage interest rates charged, this 'cost' increase will quickly be passed on to new mortgage borrowers ... on top of the increased 'mortgage insurance' fees ... on top of increased imputed mortgage origination 'costs !
Actually I don't see this as likely. The banks don't want to be saddled with the potential double whammy loss risk of REO houses potentially losing market value on top of high debt low net worth variable income mortgaged buyers going 'belly up' on their mortgage. The banks actually have strong motivation to sell off REO houses to investors with 'cash' in hand, even if it means booking a deeper loss on declining market value. While in an entirely different 'sphere' there are also new higher bank reserve requirements going into effect soon, which strongly motivates banks to dump illiquid holdings for cash ... from
http://www.huffingtonpost.com/2013/1...n_4158388.html
(snip)"The introduction of the “liquidity coverage ratio," or LCR, marks the first time U.S. regulators have required banks to have a specific amount of liquid assets in order to withstand a run on the bank or a credit crunch. U.S. financial regulation for years has focused on capital, or the ratio of equity-to-debt that a bank uses to fund its loans and securities.
It follows lessons learned from the 2007-09 crisis, during which big banks’ ability to provide liquidity, or cash on demand, was severely impaired as financial institutions grew distrustful of one another’s strength, even when banks’ capital levels suggested they were healthy institutions.
The result -- reduced lending and a system-wide move to hoard cash and safe securities such as U.S. government debt"(snip)
Indeed, as the result of banks wanting to 'dump' REO properties in exchange for 'cash', and deep pocket investors seeking high yield low risk investment options, a number of hedge funds have recently bought up 'distressed' REO houses by the 1000's as rental units ... and in turn have repackaged the rent revenues into private bonds which can be sold to those deep pocket investors. See
http://www.bloomberg.com/news/2013-1...ing-spree.html
This reallocation of the supposedly 'smart' money is most probably based on the conclusion you have just drawn ... i.e. that fewer and fewer Americans are / will be able to afford to buy their own homes, translating into a significant increase in demand for rental homes ... thus rising rent prices ... thus rising rental income earnings for the hedge fund 'corportate landlords' and for their private rent revenue bond investors. THIS is the true Neo-Feudal economy !!! And the new FHA / Fannie / Freddie regulations, plus new bank reserve regulations, will only help to accelerate this trend.
Circling back on topic, it appears that self-employed dancers and camgirls will be facing an even more uphill battle in the near future in regard to obtaining mortgage financing. I'll add that dancers and camgirls typically wind up receiving a 'high risk' classification because loan officers are smart enough to realize that very few dancers and camgirls will still be capable of the same level of dancing and camming earnings 20 years in the future, while the mortgage payments must still be made every month !!!
Maybe I'll be proven wrong, but the 'tea leaves' tend to point to two feasible scenarios for these 'high risk' self-employed borrowers ...
- 100% cash purchase
- 20% down money plus closing costs in cash, leading to a non gov't guaranteed 'private sector' 15 year mortgage with an elevated interest rate which reflects the higher risk factors that the 'private sector' lenders will be assuming in the absence of FHA / Fannie / Freddie 'guarantees' against loan defaults.
As such, if anybody has been 'sitting on the fence' in regard to buying a house, there are still a few weeks available to apply for mortgage financing under the 'old' rules and regulations.
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