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As we show
concerns for the latest industry news and how that will effect or
rather further deteriorate the income potential and/or amount of loans
to be written, take note that the effects of the changes in lending
criteria which is to effect the subprime market will actually effect
15% of the market. It is said that 15% of the borrowers fall into the
subprime loan category. It is not stating that they will not be able to
get loans but rather that they will be considered a higher risk and
will be taking loans at a higher interest rate. Those who spend the
next couple years working on making payments on time and remedying
their low credit scores will surely be looking to refinance at that
time to gain a better interest rate.
Economically speaking when one door closes or one product is no longer offered there is generally something to take it’s place.
Where there is a market, there will be a product.
The state of
Ohio is pulling together funds to bail out some consumers who have
taken ARM loans opposed to foreclosures. I’m sure we will see more of
this happening nationwide. These loan conversions will also have
paperwork and I’m sure it will involve notarization. Foreclosure
Prevention Task force in Ohio is to include private and public sector entities to work through this problem. The
Bond issue is just part of the solution. This is being considered on a
state and federal level. It is felt that the market will correct itself
and will not necessarily need additional gov’t regulation.
Subprime Lending Meltdown will directly affect the amount of homes sold through 2008.
CEO of
Century 21 talks about home inventory. Housing market is seen as
positive. Unemployment is low, people have houses to choose from and
people are shopping.
Mortgage
issues: somewhat blown out of proportion. About a one month supply of
inventory. It’s the normal process in a market. There was a hot market
so the decline is not taking things below normal. In S. California last
week, people were looking for homes. Consumers felt an opportunity to
move up. Existing home loan sales show a reversal of Jan sales.
Existing home sales rose to 6.9 units since 2003. Markets are reading this rise in Feb as positive, expecting the Fed to lower interest rates.
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