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South Lorne

'alt A' Is Self Cert

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Banks in the US are stopping the funding of Alt A as we are aware. They read like UK Self Certs. I quote:

Alt-A loans were originally designed for borrowers with clean credit records, but with other issues that often meant they provided fewer documents or even no documents showing what they earned.

I am sure it's OK this side as the applicant has to sign to state the information in the application form is true...the lender usually signs of as well....no problem.... <_<<_<<_<

http://www.marketwatch.com/news/story/impa...p;dist=hplatest

Edited by South Lorne

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Banks in the US are stopping the funding of Alt A as we are aware. They read like UK Self Certs. I quote:

I am sure it's OK this side as the applicant has to sign to state the information in the application form is true...the lender usually signs of as well....no problem.... <_<<_<<_<

http://www.marketwatch.com/news/story/impa...p;dist=hplatest

wink, wink, nudge, nudge, say no more! ;)

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What...? Are you suggesting it could happen here....are you mad?

:lol::lol::lol:

.....no.. no..noh.....it's a criminal offence to lie on an application form here....are you kidding ...?.for a house...?.. :huh::huh::huh:

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In other Alt-A news, ratings agency looking to cut ratings after the "investments" have already been trashed.

What is the point of ratings agencies again if they only tell you about the quality of something in hidsight and very very late?

S&P could cut ratings on Alt-A loans

http://www.ft.com/cms/s/2a935ee4-450e-11dc...00779fd2ac.html

Ratings agencies ply their trade with a stack of disclaimers. They do not exist to protect the investor or the integerity of the products they claim to rate.

They are in busines to make money. If an agency denies a favourable rating a company will go elsewhere next time.

It makes sense if you think about it. These people are just the same as the rest of us. When asked to decide on the risk associated with a given product they make a guess based on whatever market pressure dictates; and market pressure for most of us is a boss who makes it clear that they want this business and they won't get it if they start ranting that this stuff is crap.

Also, I'd say that they really didn't know it's crap. It seems obvious to many people here that this stuff is very risky. Bonds based on credit that was simply given to people without reference to their ability to pay it back sounds risky to us but if you're making millions of dollars out of saying it's fine then it ain't that risky.

And what will happen to the agencies; nothing. At the absolute worst one or two codgers will fall on their swords with giant retirement packages. (And I doubt even that will happen. (Pigs in the trough.)

Of course, you know all this already, but there it is.

Edited by dstars

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Ratings agencies ply their trade with a stack of disclaimers. They do not exist to protect the investor or the integerity of the products they claim to rate.

They are in busines to make money. If an agency denies a favourable rating a company will go elsewhere next time.

It makes sense if you think about it. These people are just the same as the rest of us. When asked to decide on the risk associated with a given product they make a guess based on whatever market pressure dictates; and market pressure for most of us is a boss who makes it clear that they want this business and they won't get it if they start ranting that this stuff is crap.

Also, I'd say that they really didn't know it's crap. It seems obvious to many people here that this stuff is very risky. Bonds based on credit that was simply given to people without reference to their ability to pay it back sounds risky to us but if you're making millions of dollars out of saying it's fine then it ain't that risky.

And what will happen to the agencies; nothing. At the absolute worst one or two codgers will fall on their swords with giant retirement packages. (And I doubt even that will happen. (Pigs in the trough.)

Of course, you know all this already, but there it is.

.....it looks as if the the bad lenders' auditors will be left to pick up the pieces.....but by then it will be too late....interesting the half year results were reasonably quiet on the subject while the markets were blazing...... :o:o:o

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eavesdropping from another board

187 Posts

Posted - 08/07/2007 : 1:27:56 PM

--------------------------------------------------------------------------------

Interesting times we are in. I am in the SF Bay Area, and I would estimate that over 50% of the homeowners in my area couldnt qualify for the home they are in. Sucks for them if they are in an option or intermediate ARM. Sucks for me cause ALT A is a significant portion of my business.

I wonder how this will effect values? I wonder if this means that the prices must correct to a level that people can actually afford them on a conventional product? Boy, if that's the case.....it's gonna be a LARGE correction!

My partners made a great point about this "armegedon" we are in. It is actually GOOD for us, long term. A value correction and more realistic underwriting guidelines protects the integrity of Real Estate investment value, long term. As Brokers now, more than ever, we have value. We can't just put some numbers on an app and send it. Correct "packaging" can mean the difference between accepted or rejected. Once this all shakes out, we'll be back to a 3 trillion dollar a year industry with a lot less LO's splitting the pie. When the values become more stable or even start increasing 3-5%, the market will come out with new alt a products, and people will stand in line to get them, just like in 2003.

Here are some predictions:

30% of all LO's will be gone in the next 90 days.

The LO's that don't cry in their coffee and actually WORK every day will see increased business based on fallout. Don't forget, these REO's and foreclosures won't sit empty. Someone will buy them for some amount. They will need financing. The trust deed holders buy them cheap and want the cash. The buyers will need good LO's to get them the best loan.

In 24 months all the doom and gloom is gone, values are 25-30% less than they are right now, but increasing. Those of that stick it out get rich and SAVE OUR MONEY THIS TIME!!!

http://forum.brokeroutpost.com/loans/forum/2/150480.htm

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Did you know?

If you press ALT+A when on the Bank of England's website, it crashes :P

I'm not silly enough to go and try.

Do you know you can't create a folder called "con" in windows... Go on, try it, if your bored enough/or silly enough, which ever.

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