The O.C. Mortgage Blog

I would like to hear your comments about the government getting involved with this Mortgage Recast "Freeze" they're trying to implement for certain borrowers with Sub-Prime Loans.

The panic over the sub-prime mortgage fall-out (reported for the past several months) has recently escalated, causing the Dow to decline by over 900 points in the past several days!  The Fed along with the big Wall St. Investment banks work together managing mortgage backed securites on one end and issuing  large lines of credit to mortgage bankers on the other end (A Mortgage Banker is not a depository bank lender, they depend on lines of credit to fund loans) to keep the mortgage engine flowing smoothly - like water flowing thru a pipe.  But when you jam up either end of the flow or worse, just turn the faucet to an annoying drip (like the investment banks have done) you might as well just shut the main valve off.  Ever been stuck in the shower with a head full of shampoo and the water suddenly shuts off? Yeah, it's kinda like that.......... Eyes burning, cursing and trying to figure out what just happened and how soon the water will be turned back on!  I think you get my analogy. 

While I do think we'll see 10% (depending on location) further price declines on average across most price ranges and markets in  2008. I don't agree with the pessimistic outlook of some analysts paraded on CNBC who think this almost mortgage and real estate armageddan and will last thru 2010 and maybe 2011.  I see a soft landing ahead with a nice even keeled recovery (if the Fed and Wall St. do their jobs) starting in late '08 or early '09.

After you trim back all the fat of the media hype; The stats on All non-prime mortgage loan foreclosures as estimated in mid-August 2007 will be less than 2% the the entire U.S. homes!!!  Of those roughly 1 million or so expected foreclosures, the lenders (Wall St. investment bankers) will recoup at least 50% minimum and most likely closure to 60, 70 or 80 cents on the dollar after re-sale (discounted price and all) of these foreclosed homes. 

The media along with the large Investment Banks on Wall St. (and don't forget the Federal Reserve too) have the power to "spin" this anyway they'd like to serve their best interests.  I believe that's a very real possibility.  The Wall St. pinstripes (and I'm not talking about the average stock broker) are used to getting 6 figures in year end bonuses and I've heard this year those bonus's are not coming.  I am of the strong belief that they are laying the groundwork right now to insure they never miss those $200 million (per top executive) and up Dec. holiday bonuses ever again.  

You might recall a few months ago when New Century  (2nd largest independent sub-prime lender in Country) based in Irvine, announced their Chap. 11 filing and subsequent offer for sale?  Several of these very same W.S. bankers were in negotitations with their CEO to pick the carcass, offering pennies on the dollar for their loan servicing div. etc................

I could go on about this so called sub-prime mess, but I would really like to hear your thoughts & comments on this topic too.  Please share your comments, thoughts, fears, concerns and how it has affected you, if at all?   Also, if you or anybody you know recently refinanced due to a resetting adjustable rate or tried to refi but didn't due to additional tightening of required documentation and/or lenders cutting the appraised values, etc.  Your feedback, comments, suggestions for future topics would also be appreciated...........

My intent is to open dialogue and get a finger on the pulse of this turbulent real estate/mortgage market.   Thanks for reading my blog, I hope you found it informative and helpful in giving you one person's opinion (after being crazy enough to stay in this business for the past 24 years, LOL) on what I feel is really going on behind the wizard's curtain,  in the mortgage and real estate market recently.