Suggestion by 18.104.22.168 on 2007-12-13 15:53:08
I think the problem of those stuck with losses related to subprime credit exposure is that they own either subordinated pieces in RMBS securitizations or hold CDO's which consist of subordinated RMBS tranches (even most senior tranches are impaired materially) - you are right that you could not lose much in a singe mortgage bought at 70
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I will glady become your bull editor. I've owned a subprime mortgage company operation in TN, GA,SC, KY & LA for the past 10 years and have been in this business for 20. I would like to start by saying that subprime lending as anyone with my tenure knows it has completely vanished for the past 5 years and is now re-emerging. The subprime market was not designed to help people with recently bad credit obtain housing, especially if their incomes could not be documented. The subprime industry was there to help existing homeowners refinance to pay off debt, improve their homes, to simply take care of temporary situations so that after the improvements were made to their credit, finances and homes, they could eventually return to prime products for the duration of their terms. If you've had bad credit in your past, most agency paper including Fannie Mae, Freddie Mac and certainly FHA will acoomodate you. If you've had recent financial troubles (past 12 months or less), maybe it isn't the most opportune time to take on the largest debt any single consumer can obtain. Now with that being said, let's look at who to blame. Should I be blamed for offering my customers a product that readily available on the market? If I don't give it to them, they simply walk accross the street to get it. Should independent mortgage lenders (pass through lenders not selling any products of their own) like Countrywide, New Century, Accredited, WMC, American Home Mortgage etc..etc. be blamed for offering me that product for my customers? Same scenario, someone will if it is available. Should the banks like Citibank, Wells Fargo, Chase and Bank of America be blamed for offering this product? No, same issues. If investors crave certain products, should investment bankers not provide those products? I would have to put the blame on the investor and the investment banks....they built this "Frankenstein" and now that he's running through the village reaking havoc, no one wants anything to do with him!!! Instead, they are pulling their money out and pointing fingers at everyone else. Did I or anyone else ever agree with the products? Did we sell them? Yes and no and most im portantly, irrelevent. Here is what needs to be done:
*loan amount limit change *100% financing *allow delinquencies in the most recent 12 months IF the customer can document enough income and BENEFIT from the refinance transaction *******THIS would hopefully allow many of the people STUCK in adjustible rate mortgages to refinance...if they can afford the payment, if it truly benefits them...allow it. ********THAT'S IT...as far as doing something to ensure this doesn't happen again? Not going to happen....investors will eventually sneak back into MBS and gradually over time the guidelines will loosen up...just hopefully have Fannie, Freddie and FHA playing bigger roles in the future will prevent anything becoming this large again. Keep in mind, the subprime mortgage business is a valuable part of our economic engine, this market serves a great deal of consumers and needs to be saved from destruction, every day that goes by without a plan puts homeowners a day closer to foreclosure, brokers are going out of business fast which means their only local source of help is going away...who else is talking with these people? My perspective. If possible, get this email to the President, Fed Chairman, Secretary of the Treasury, OFHEO regulator etc....do something for gods sake. Chris "Chip" Hooker, Cleveland TN.