Vivaldo Posted May 7, 2006 Share Posted May 7, 2006 http://www.financialsense.com/fsu/editorials/2006/0501.html A DISASTER OF EPIC PROPORTIONS by Christopher G. Galakoutis May 1, 2006 Despite the fact we just went through one of the warmest winters on record, it was nevertheless a winter of discontent for many in the real estate market. Inventories of unsold homes have been building for several months, as interest from prospective buyers has slowed to a crawl from the feverish pitch of the past few years. And while springtime is historically a good time of year to clean up the old house and stick a “For Sale” sign on the front lawn, judging by the number of signs out there around the country this year might very well break records for the number of homes available and unsold. Not helping the sales numbers are reports that banking regulators, always fashionably late to every party, are closely monitoring the mortgage loan industry. They are expected to issue guidance in the next few months that may restrict certain loan types; the types that can throw a homeowner into foreclosure when the so-called “teaser” and other inducement type rates expire. I came across a mind-boggling statistic recently in a Washington Post article by Kirstin Downey that I thought I would share. It indicated that roughly two-thirds of all people who purchased homes in the Washington area in 2005 used adjustable rate interest-only or option mortgages, up from 2.2 percent in 2000. Mortgage brokers are, not surprisingly, quite concerned about any regulation that might disturb this most surreal of relationships, not to mention their very profitable gravy train ride. They argue that borrowers are taking out these types of loans because it is the only way they can afford to buy a home. One broker quoted in the story went as far as to say that without these types of products homes could not be purchased, and any action to remove them would in fact precipitate a “disaster of epic proportions” in the housing market. Click through for the whole article Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.