Posted: Dec 7, 07 6:36am
Don't believe "anything" you read and hear about the housing market going to shit-innna-handbasket. There is a ton of 6% , 30 year fixed rate mortgage money out there just waiting to be sucked up by qualified "Prime Creditworthy Buyers".
The Bushies just threw another "political lie" out to the public and said "we are gonna help you" so you don't loose your house. Baloney ! .. Oh, and did you believe him when he said "there are biological weapons of mass destruction in Iraq " ?
The problem lies within the Investment Industry and the deterioration of the real dollar value of Collateralized Debt Obligation or CDOs. Financiers are getting their asses whopped because these CDOs are "high risk obligations" and the banks gave away "garunties of protected investment levels" to the speculators. Now the banks are eating crow because the quality of the CDO as an investment vehicle is withering away. The Sub-prime mortgage customers bit off a piece of cake they can't chew let alone swallow. When a sub-primer defaults on the "collateralized mortgage loan" the repackaged CDO investment vehicle collapses in value. That ends up as a debt obligation to the bank. This is compounded because the bank must list this as a negative asset value and hence an "operating loss". Gee ..who is Bush bailing out, the sub-prime homeowner or the Bank ?
Home and condo builders went on a building frenzy: It fueled the Building supply industry. It fueled the real-estate industry and those sales people "artificially pushed your home value through the roof". It fueled the mortgage loan industry because there is so much mortgage money available (as I said in the beginning). The banks, which were driven by the greed of shareholders and investors, strived for higher profits. That resulted in the banks "changing the rules or outright ignoring the rules" on risk management. The SEC and the FED looked the other way because the banks "balance sheets" were healthy.
Now then ..the root of real problem shows it's ugly face. The "churn rate" of reselling the asset, in this case the house or condo" didn't materialize. There were no more customers to sell a mortgage to. That caused a domino effect because the sub-primers "can't flip the house" in a resale or qualify for a new prime mortgage. The ARM was a ticking time bomb and everybody knew it.
The banks got caught with their pants down and screwed it up for everybody in the "food chain" and I wouldn't loose to much sleep over the value of your house or condo .."it wasn't worth that much money in the first place" !
If you want to sell it, hey ..just price it according to what the market will bear and a Prime borrower will show up with 10% down and qualify for a 6%, 30 year fixed rate mortgage ..no strings attached !
The housing industry is "alive and well" ..it just throwing-up right now because it over ate !
