LISTEN UP – THIS IS SERIOUS…WE’RE IN TROUBLE – FOR REAL!!!
I’ve read many articles, reviewed various websites, and attended a few seminars to gain an understanding of the current economic reality. Based on what I’ve discovered, I’d like to offer the following analysis:
According to various industry leaders, the current economic disaster began with unscrupulous and unwise lending to help home buyers with shaky credit and incomes (no-doc/stated income loans). Consequently, brokers and banks that made the loans made a boat load of money by putting borrowers in mortgages they couldn’t afford or sustain.
Next, those mortgages ended up being bundled, marketed, and sold as mortgage-backed securities – carrying good ratings to investors. However, as homeowners struggled and subsequently failed to meet their mortgage payments, foreclosures have mounted, devastating families, hitting banks’ bottom lines and prompting lenders to yank the reins on credit.
Meanwhile, the value of those mortgage-backed securities has plummeted along with investor interest in them, and housing-tied economic catastrophe has been created.
THE RESULT:
Seven out of 10 seriously delinquent subprime mortgage borrowers are still not getting the help they need to keep their homes.
That’s according to a report released Tuesday by the State Foreclosure Prevention Working Group, a coalition formed by eleven state attorneys general and the Conference of Bank Supervisors in the summer of 2007 to work with loan servicers to prevent unnecessary foreclosures.
"Our collaborative efforts to date have failed to prevent a large number of unnecessary foreclosures," said North Carolina Deputy Commissioner of Banks Mark Pearce. "We need to find solutions that fit the size of the problem we are facing."
The report, which surveyed lender efforts and programs like Hope Now, found that the number of borrowers getting help each month has increased from about 210,000 in October to nearly 261,000 in January. But because the total number of troubled borrowers is also growing so quickly, from 820,000 seriously delinquent loans last fall to over 1 million at the start of the year, the proportion of mortgage rescues has remained essentially unchanged.
"We’re still way behind," said Iowa Attorney General Tom Miller, who helped form the coalition.
Nearly a quarter of all subprime loans are in delinquency. About 300,000 subprime borrowers are now in some stage of foreclosure, up 8% since last October. (Thanks Rev. Paris Lewis for providing this info!)
If you or someone you know are facing foreclosure, you may want to check this out!
So you’re thinking, this doesn’t affect me – I’m not in this boat…OH YES YOU ARE…READ ON…
Today, certain people, although not directly involved in making or getting subprime loans, are being indirectly affected by it and engulfed in it through the following:
- First-time home buyers – since the pool of lending programs has shrunk, credit score requirements are 100 points higher & they have to put 20% or more as a down payment
- Lenders have stricter requirements & require credit scores of 675 or higher
- Refinancing is much more difficult
- Home-equity lines of credit are drying up
- Student loans are the NEXT BIGGEST PROBLEM since many lenders are pulling out, requiring co-signers w/higher credit scores, and some states suspending their loan programs (Michigan & Pennsylvania that I know of)
- Credit Cards – BIG PROBLEM since Americans owe more than $1 Trillion
- Small Business Lending – feeling the credit crunch & vendors not paying their bills
- Real Estate Investors – Citibank no longer offers mortgage loans for investment properties on three & four-family homes. Furthermore, most bank are only offering 75-80% financing for those properties
That’s my take – stay tuned for more information regarding my upcoming "State of the Economy Address" scheduled to take place @ The Mars Hill Baptist Church & my "Steps YOU MUST Take Now."
