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Thread: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

  1. #26
    Featured Member scorpio's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    Yes, but why would anyone want to buy an investment property in a declining market that has no hope of recovery. The auto makers impending collapse due to collasal mis management will turn the rust belt into Mogudishu in short order. Most of detroit is already there.

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    Banned Melonie's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    Yes, but why would anyone want to buy an investment property in a declining market that has no hope of recovery.
    Does this mean that I can interpret that your statement supports a conclusion that homes in Detroit are therefore essentially worthless from a market value standpoint other than the 'scrap value' of their plumbing, wiring etc. ? After all, no buyers in their right mind will be making purchase offers on intact houses in Detroit, and even if they did the majority of mortgage lenders wouldn't risk financing the purchase.

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    God/dess Deogol's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    Not even scrap value because looters have a tendency to strip all the copper wiring and resell plumbing fixtures from vacant homes.

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    Featured Member scorpio's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    That is correct, Mel... sad, isn't it?

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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    ^^^ It's really sad if you happen to be a homeowner in Detroit or another bubble city that is dependent on refinancing in order to avoid foreclosure and bankruptcy ! It's also really sad if you happen to be a mortgage lender who is holding delinquent mortgage paper on a $100,000 house in Detroit that will only bring 'scrap value' at auction i.e. a virtually total loss - which will bankrupt the mortgage lender too once the foreclosure / bankruptcy rate for homeowners rises to 5-10%!

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    God/dess Deogol's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    A lot of Detroit needs to be returned to the corn fields if you ask me....

    Besides, nothing like farmland and natural preserves to give a developer a big ole hard on for pulling out the bulldozer.

  7. #32
    Featured Member scorpio's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    Detroit was never a bubble city. Homes were not over priced. They simply went down in value.

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    Featured Member Vamp's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    As someone who recently moved from the Detroit area I just want to say no one lives in Detroit lol.

    Most homes in the area are in the burbs in other towns. Namely Ann Arbor and Ponantic. The real estate in these areas have been waaaaayyyyyyyyy over priced for the past decade. I lived fifteen min from Detroit in a town called Ypsilanti. A small two bedroom home there with just a yard was going for well over $150,000 at one time. Considering this isnt Californa, that is way over priced.

    The problem with the Detroit area is not just auto makers. It is the decline of manufacturing in general. Pfizer closed a plant in that area too. The mayors and officials in the area for the past fifty years have not worked to find other ways to sustain the local economy.

    Being away from the area I think its just a correction of over valued property and the shift out of manufactoring. It will be a hard transition though.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    it now appears that the Subprime Credit Defaults are starting to have 'upstream' effects at MAJOR bank who underwrote the subprime lenders ...

    (snip)"Friday, February 16, 2007
    Warehouse Lender Acting "Irrationally"

    From MarketWatch: Merrill, J.P. Morgan pull back in credit crunch at low-end of mortgage market. This article is mostly a summary of recent events:

    A credit crunch in the market for low-end mortgages has left companies specializing in these subprime loans at the mercy of big banks like Merrill Lynch & Co. and J.P. Morgan Chase.
    ...
    Warehouse lenders have started worrying about the quality of subprime loans that have been originated in recent years. Some are now asking subprime specialists for bigger haircuts, putting the originators in financial peril and forcing some into bankruptcy.

    "Warehouse lenders are the lifelines for a lot of these subprime originators because they don't have the financial capacity to fund these loans by themselves," Ernie Napier, head of the specialty finance team at rating agency Standard & Poor's, said. "To the extent that these warehouse lenders go away, the whole process starts to unravel."

    But this is interesting:

    "We have eight different warehouse lenders; I would say the majority of them are acting very rationally," [Stuart Marvin, executive vice president, Accredited Home Lenders] said. "There is one that is acting somewhat irrationally, although I won't mention them by name. We have migrated the fundings away from that warehouse lender to one of the other seven until they begin to act more rationally again."

    Industry publication National Mortgage News said this week that Merrill Lynch has been making margins calls. A Merrill spokesman declined to comment.

    Someone is acting "irrationally"? Maybe someone has taken some huge losses. Or maybe, in Mr. Marvin's view, the seven other warehouse lenders will start acting "irrationally" soon."(snip)

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    Featured Member scorpio's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    IMHO, I believe the root of the problem has to do with the wildly innacurate and unfaire crdit score reporting system. ther is no consistancy, and lenders who rely on the FICO scores are not getting good info.

  11. #36
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    what's inaccurate about FICO scores? i am very curious about it.

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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    one issue is certainly that FICO scores more or less measure past performance, but do not necessarily accurately predict future performance. Case in point would be humdreds of thousands of US auto workers who undoubtedly will have primo FICO scores right up to the point where Ford / GM / Chrysler start start implementing the massive layoffs and permanent plant closures which they have announced.

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    Featured Member Vamp's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    Nothing can predict when someone is going to be laid off or the future. Even if they could it would be unfair to judge someone on what they havent done.

    The Fico score has risk factor criteria built into it, based on past performance yes. That is why it was even invented.

    It is also silly to think that a large lender only uses the fico score. They use alot of differant criteria based on their own standards. Your credit score may be fine by normal standards but then they adjust based on what they look for approving or denying you based on that.

    Fact of the matter is the housing boom created greedy lenders who wanted to take advantage of the subprime markets. They lowered and lowered their own standards to accept almost anyone. They created the mess and the rest of us will end up paying for it.
    Nature knows no indecencies; man invents them. ~ Mark Twain


  14. #39
    Featured Member scorpio's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    Dont forget it was the govt that encouraged sub prime to lend in the first place, you know, to help more people into home ownership.

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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    it was the govt that encouraged sub prime to lend in the first place
    Absolutely true ... HUD issued directives to Fannie Mae and Freddie Mac to give preferential treatment to urban minority first time home mortgage applicants during the Clinton administration. If Fannie and Freddie can ever get their financial reporting revised correctly and released (situation is so dicey that the NYSE threatened to de-list Fannie for being something like 2 years behind on releasing financial statements !), the US taxpayer is going to wind up taking a huge 'haircut' to bail Fannie and Freddie out.

    I wonder whether or not HUD has also issued a directive to Fannie and Freddie that the urban minority owned houses whose mortages have gone into default can't be foreclosed on ?

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    Featured Member Vamp's Avatar
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    Default Re: Subprime Lenders Collapsing Faster than Cheaply Built Houses !

    That is true. At the same time the goverment did not encourage predatory lending. Which is basicaly mortgages with outragous terms, telling people they are subprime when they arent, and over all lying to borrowers. These practices have or were common place for some sub prime lenders. Not to mention the fact that by creating more buyers it drove up the price of homes until they were overinflated.

    ahhhhh the discussion has come full circle.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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