It's Happening

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Originally Posted by FenderGuy

I'm looking foward to buying a house in the next 6 months to a year. It's going to be interesting

Here is the test whether or not to go buy a house Fender.

When YOU start to think man I'll never put a dime into RE, cvause it will never come back...Then go buy.


Right now U still have the mentality of wow its getting cheaper, I will go buy now before it goes back up...

[GDSOB]

Conforming loan programs still look good and should stay pretty solid- This is how most people finance homes everywhere except in the silly areas. So if you got a down payment, good credit, and decent debt ratio, the deals will be plenty. Just don't plan on moving for a while...

[turbo6bar]

+1 to GDSOB. The deals are getting better by the day. When you find the perfect buy, jump on it. If it is truly perfect, you'll be happy to stay put for a long time.

[FenderGuy]

Originally Posted by legion

Let me rephrase:

I wouldn't want to finance a house in the next year or two...

I wouldn't want to sell one either.

Wait and see what happens in 6 months when the Feds have changed interest rates by lowering them, its being predicated. This and how the housing market is one of the reasons why I will buy later and not now..I agree with GDSOB...I'm just getting ready now

[Rick Lee]

The Fed's lowering rates is not the same as mortgage interest rates going down. Mort. rates are tied to bond yields, sometimes LIBOR. The Fed kept rates the same today, yet mort. rates are climbing.

Anyway, look at the bright side. If you're in the mortgage biz and can hold out another year or two, once rates get good again, there will be an easy refi boom on which to cash in.

[RANDY P]

Banks will be losing their heads -

Along with the obvious over-valuing we're seeing just out in the streets, more than a fair amount of these properties were overvalued even when appreciation was present.

There's something called a "whip" - a variance allowed between what the bank actually finds as value, and the determined value on appraisals -

Lenders we allowing up to a 12% whip OVER the AVM value declared (Automated Valuation Model - sort of a fancy zilllow that's rarely off) even at 100% LTV.

I'm doing a refi for someone, I tell the appraiser to punch up the value - comps are sketchy and we're going for 100% LTV - the AVM comes in 12% under what I declare, I'll still make it.

There's the predicted amounts that RE are sliding, and there's the loan amounts owed against them, which in some cases the properties were over valued 12% even at the time of appraisal.

The actual $$$ amounts oweds will be worse for some. Depreciate 10%, be in the hole 22% over value.

rjp

[turbo6bar]

If the recent weeks are any sign of the future, mortgage rates will be uncoupled from treasury bonds. For the past few years, 30 yr fixed rates have trended about 1.3-1.5% above the 10 yr treasury bond. However, in the past 2-3 weeks, treasury bond yields have tanked, while mortgage rates have gone in the opposite direction, bucking a very long trend.

As RANDY P states, the market is changing rapidly. Loans are not being sold on the secondary market. Big lenders are deleting wholesale divisions (re: the brokers) and going purely retail. This indicates lenders are originating only loans that can be held in their portfolio or loans that can be sold to GSEs (Fannie, Freddie, Ginnie). So, for the first time in 3,4...5 years, lenders are actually having to evaluate the credit worthiness of borrowers AND get an interest rate that compensates for risk.

No one, including the bubble heads could have predicted when this would happen. We all knew it would happen. The only question was when. That question has been answered. Let's all rob tabs before we have to bend over and kiss it goodbye.

[competentone]

"It's happening" would be an appropriate title for this:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml

China threatens 'nuclear option' of dollar sales
By Ambrose Evans-Pritchard
Last Updated: 1:48am BST 08/08/2007



The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.

"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.

The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being "held hostage to economic decicions being made in Beijing, Shanghai, or Tokyo".

She said foreign control over 44pc of the US national debt had left America acutely vulnerable.

Simon Derrick, a currency strategist at the Bank of New York Mellon, said the comments were a message to the US Senate as Capitol Hill prepares legislation for the Autumn session.

"The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles," he said.

A bill drafted by a group of US senators, and backed by the Senate Finance Committee, calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.

The yuan has appreciated 9pc against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9bn in June.

Henry Paulson, the US Tresury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation".

Mr Paulson is a China expert from his days as head of Goldman Sachs. He has opted for a softer form of diplomacy, but appeared to win few concession from Beijing on a unscheduled trip to China last week aimed at calming the waters.

[RANDY P]

Originally Posted by GDSOB

Conforming loan programs still look good and should stay pretty solid- This is how most people finance homes everywhere except in the silly areas. So if you got a down payment, good credit, and decent debt ratio, the deals will be plenty. Just don't plan on moving for a while...

It's also my observation that the majority of the problems are in fact, Jumbo loan sizes.

Below the conforming loan limits, ($417.5K nationwide) there are a plethora of options for reasonable rates for people with bad credit, subprime, Fannie, so on and so on - there's stuff on fire there, but at least those houses could be moved in the event of foreclosure a lot easier than the big stuff.

the Alt A segment that is going to get hosed the worst are the leveraged jumbo guys out there - zero down I/O or the zero down option arm in hopes it appreciates and you can sell, etc. etc.

CA never really had any real options since the loan sizes in certain parts easily exceeded conforming limits due to purchase prices being so damn high, therefore exempting the area from reasonable underwriting guidelines and pushing them into other categories.

Fannie would have to almost double the loan limits in order to step into CA for instance. They haven't had fannie's support for a long time due to the sheer loan sizes there.

rjp