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Author Topic: Danielson, are the subprime & credit mess worrying you right now?  (Read 2230 times)
Alex23
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« on: August 22, 2007, 02:26:03 PM »

Are the interests only loans and 80/20's gone for good?
Will we ever see mid 5's 30yr fixed rates again any time soon?
Will the .5 rate cut from the Feds ne enough to help?

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danielson
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« Reply #1 on: August 22, 2007, 02:38:41 PM »

Are the interests only loans and 80/20's gone for good?
Will we ever see mid 5's 30yr fixed rates again any time soon?
Will the .5 rate cut from the Feds ne enough to help?



Are the interests only loans and 80/20's gone for good? - Cashout 80/20's are gone for right now. Only subprime lenders allowed them anyway. Countrywide is still offering an 80/20 purchase for qualifying customers(it is a lot harder to qualify now), but who knows for how much longer. First Magnus going under last week crippled our office, as they were the last to offer really creative loans. I/O's are around, but hard to find at higher than 90% ltv. Eventually, they will go down to 80% from what I have heard.

Will we ever see mid 5's 30yr fixed rates again any time soon?- Yeah, we will. The banks left standing will still have to be competitive in the future. We are seeing low sixes now, so it's not a far cry really. The rate now are not bad, but it's the property values and the lack of programs for risky buyers that's killing the biz.

Will the .5 rate cut from the Feds ne enough to help? - No, not here anyway. People don't give a fuck about a few bips on the rate. They either want to sell their house without coming in with too much money or buy a house and get a way better deal than they should be getting. Only people who are refinancing really are the people in ARMS that are going to adjust. And most of them are fucked, Appraisal reviews are tighter now than I have even seen and there are going to be more foreclosures than people are predicting as these ARMS keep adjusting. People just owe more than their houses are worth.

On another note Alex, remember when I said it was a good time to invest in Apartments? Scratch that, more and more people are going to be renting their houses out now. Apartments might actually suffer. Thats why I am TRYING to buy a car wash, gotta get something that is cheap and everyone needs, salt ruins cars in the winters here.


Oh, and I am worried a bit. We have lost over half of our brokers, but their old customers still need loans so I deal with quite a few of them, cuz some of the other guys I work with actually have the balls to give a guy a 100 dollar referral fee when they close a loan. If I make 3 grand, I'll give the guy who sent it to me a grand, fuck it, structuring them is not the hard thing, finding clients is, so I have been fortunate to get a lot of referrals lately.
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Alex23
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« Reply #2 on: August 22, 2007, 03:54:40 PM »

Are the interests only loans and 80/20's gone for good? - Cashout 80/20's are gone for right now. Only subprime lenders allowed them anyway. Countrywide is still offering an 80/20 purchase for qualifying customers(it is a lot harder to qualify now), but who knows for how much longer. First Magnus going under last week crippled our office, as they were the last to offer really creative loans. I/O's are around, but hard to find at higher than 90% ltv. Eventually, they will go down to 80% from what I have heard.

Will we ever see mid 5's 30yr fixed rates again any time soon?- Yeah, we will. The banks left standing will still have to be competitive in the future. We are seeing low sixes now, so it's not a far cry really. The rate now are not bad, but it's the property values and the lack of programs for risky buyers that's killing the biz.

Will the .5 rate cut from the Feds ne enough to help? - No, not here anyway. People don't give a fuck about a few bips on the rate. They either want to sell their house without coming in with too much money or buy a house and get a way better deal than they should be getting. Only people who are refinancing really are the people in ARMS that are going to adjust. And most of them are fucked, Appraisal reviews are tighter now than I have even seen and there are going to be more foreclosures than people are predicting as these ARMS keep adjusting. People just owe more than their houses are worth.

On another note Alex, remember when I said it was a good time to invest in Apartments? Scratch that, more and more people are going to be renting their houses out now. Apartments might actually suffer. Thats why I am TRYING to buy a car wash, gotta get something that is cheap and everyone needs, salt ruins cars in the winters here.


Oh, and I am worried a bit. We have lost over half of our brokers, but their old customers still need loans so I deal with quite a few of them, cuz some of the other guys I work with actually have the balls to give a guy a 100 dollar referral fee when they close a loan. If I make 3 grand, I'll give the guy who sent it to me a grand, fuck it, structuring them is not the hard thing, finding clients is, so I have been fortunate to get a lot of referrals lately.


Yea I agreed with you at the time about the appartments. However, people renting their homes need a place to go. I had friends in the Bay Area who would rent their 4br, turn around and rent a small 2br townhouse for a year or two. Their house being paid for, they actually made a profit. Where do you think people being pushed out of their homes are going to go?

Here in Carlsbad/San Marcos, the rent are going down at a high rate. I would say almost 10% this year; I'm a little worried about next year. Thank god I didn't cash out like we talked about. At least I've got enough equity and a mortgage "coverable" by the rent, even if rent prices keep going down. It's important for me to be cashflow positive now. It wasn't a year ago.

The Carwash is a good idea. I've thought about a Laudromat too. Pretty easy to manage too; no inventory, very low staff....
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danielson
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« Reply #3 on: August 22, 2007, 04:10:23 PM »



The Carwash is a good idea. I've thought about a Laudromat too. Pretty easy to manage too; no inventory, very low staff....

Yeah, my dad actually owned 9 car washes with his brother until he sold them all when my uncle died about 7 years ago. The do it yourself car washes are pretty cheap around here actually. I put in two bids on properties lately but no success yet. I can buy one for under 200 grand, and since I will get paid on the financing, unless Interbay Funding goes under too, it could work out. I am definitely not above going to empty the machines every morning and take the money to the bank, as long as I make a profit, which in the winter I definitely know I would. The drive through ones are a bigger risk though, cost between 600 k and 2 million actually, then you have to hire a manager and risk him stealing and other employees as well. I just want to get my foot wet so to speak in something else, cuz the real estate market is too volatile right now.
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« Reply #4 on: August 23, 2007, 02:51:24 PM »

Yeah, my dad actually owned 9 car washes with his brother until he sold them all when my uncle died about 7 years ago. The do it yourself car washes are pretty cheap around here actually. I put in two bids on properties lately but no success yet. I can buy one for under 200 grand, and since I will get paid on the financing, unless Interbay Funding goes under too, it could work out. I am definitely not above going to empty the machines every morning and take the money to the bank, as long as I make a profit, which in the winter I definitely know I would. The drive through ones are a bigger risk though, cost between 600 k and 2 million actually, then you have to hire a manager and risk him stealing and other employees as well. I just want to get my foot wet so to speak in something else, cuz the real estate market is too volatile right now.

Just something to consider, it depends on location too.... increased environmental costs & restrictions for the waste water disposal etc.

Some areas are making it difficult to even run a pressuer washer on a building. Zero run off.
This stuff will get more strict all the time.

The housing market is destroyed by me. Every developer is dead in the water w/ at least 1 too many farms bought at
development prices. Only the richest will ride it out.
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danielson
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« Reply #5 on: August 23, 2007, 02:58:36 PM »

Just something to consider, it depends on location too.... increased environmental costs & restrictions for the waste water disposal etc.

Some areas are making it difficult to even run a pressuer washer on a building. Zero run off.
This stuff will get more strict all the time.

The housing market is destroyed by me. Every developer is dead in the water w/ at least 1 too many farms bought at
development prices. Only the richest will ride it out.

Yeah, I don't know much about that stuff other than the water is actually recycled and used over and over from what I hear. Thanks, I will look into it.
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« Reply #6 on: August 23, 2007, 08:21:30 PM »

You are right danielson, water is recycled.

How often did your father changed the spinning brushes?


And as for subprime & credit mess, i blame mexicans, nothing personal, but usa is so full of aliens that its becoming a shitty place.

ps: Im not american but i believe the immigrants ARE a real problem
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danielson
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« Reply #7 on: August 23, 2007, 09:19:24 PM »

You are right danielson, water is recycled.

How often did your father changed the spinning brushes?


And as for subprime & credit mess, i blame mexicans, nothing personal, but usa is so full of aliens that its becoming a shitty place.

ps: Im not american but i believe the immigrants ARE a real problem

I don't know anything about the brushes. I can ask him. And believe me, it is not one race of people who are being foreclosed on. You can make 100 grand a year, but if your ARM adjusts and you can't refinance(due to home values going down), and your payment goes up 30% or more, you are fucked if you have many other bills to pay, which most people do.
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« Reply #8 on: August 24, 2007, 10:50:40 AM »

I don't know anything about the brushes. I can ask him. And believe me, it is not one race of people who are being foreclosed on. You can make 100 grand a year, but if your ARM adjusts and you can't refinance(due to home values going down), and your payment goes up 30% or more, you are fucked if you have many other bills to pay, which most people do.

It's been told that americans aint saving enough money, and spending way too much. This is like the low class in chile, spending more and more everyday, even though their average income is like us$300+-/month, so this is how it ends. 100 grand a year in USA is like nothing i guess, but this whole mess aint going to affect USA as much as it will afftect third world countries and europe. Just look at the EU injecting billions of dollars, more than its needed right now, do you know what this means? It means the problem is way bigger for them than for america.


Anyway, good luck for whoever is being affected by this mess, because this is not over, but just starting Smiley
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danielson
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« Reply #9 on: August 24, 2007, 10:54:48 AM »



Anyway, good luck for whoever is being affected by this mess, because this is not over, but just starting Smiley

Yeah, it is going to get worse. 20% of all ARMS that adjust in the next 2 years are going to go into foreclosure in the US. Not looking good at all.
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« Reply #10 on: August 24, 2007, 10:58:47 AM »

Yeah, it is going to get worse. 20% of all ARMS that adjust in the next 2 years are going to go into foreclosure in the US. Not looking good at all.

what are they basing those figures on?  Man, some people are going to clean up at the end of all this. 
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« Reply #11 on: August 24, 2007, 11:00:22 AM »

what are they basing those figures on?  Man, some people are going to clean up at the end of all this. 

That was just something I read in the USA today actually.
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« Reply #12 on: August 25, 2007, 02:00:41 PM »

Yeah, it is going to get worse. 20% of all ARMS that adjust in the next 2 years are going to go into foreclosure in the US. Not looking good at all.

Thank god I have three more years on my ARM. Luckily, I bought brand new when I had my townhome built. The area is booming just enough with new units being built up every quarter. I knew I couldn't lose money by buying in this area. The only problem is that I put down 5% and I still currently have 5% equity after two years. But It could be worse because it could've dipped below par.

I'm in the mortgage business as well and I feel it's not going to get too much worse before it gets better. All it takes is a a group of millionaire investors not afraid to take a financial risk, to get together and start a new company with a specialty niche program. Everybody jumps on that bandwagon while additional companies are formed to prevent a monopoly. They begin to loosen their guidelines once they fell comfortable about the risk.

Currently, Don't be suprised if Fannie Mae starts to open up their programs with some higher LTV based products to take advantage of the subprime demise. I've been really tapping into the FHA market as of late with some good success.

I for one, plan to stick this slump out because I know I will cash in when the bottom of the bell curve begins to rise. I'm confident in my ability to sell in this market. It just takes becoming more resourceful. Knowing all the angles and using them to their fullest advantage. Working three or four times as much to generate the same, if not more clients.
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« Reply #13 on: August 25, 2007, 02:27:43 PM »

Thank god I have three more years on my ARM. Luckily, I bought brand new when I had my townhome built. The area is booming just enough with new units being built up every quarter. I knew I couldn't lose money by buying in this area. The only problem is that I put down 5% and I still currently have 5% equity after two years. But It could be worse because it could've dipped below par.

I'm in the mortgage business as well and I feel it's not going to get too much worse before it gets better. All it takes is a a group of millionaire investors not afraid to take a financial risk, to get together and start a new company with a specialty niche program. Everybody jumps on that bandwagon while additional companies are formed to prevent a monopoly. They begin to loosen their guidelines once they fell comfortable about the risk.

Currently, Don't be suprised if Fannie Mae starts to open up their programs with some higher LTV based products to take advantage of the subprime demise. I've been really tapping into the FHA market as of late with some good success.

I for one, plan to stick this slump out because I know I will cash in when the bottom of the bell curve begins to rise. I'm confident in my ability to sell in this market. It just takes becoming more resourceful. Knowing all the angles and using them to their fullest advantage. Working three or four times as much to generate the same, if not more clients.

I agree with you completely. You are fortunate that your house value hasn't dropped. No one in my area is that lucky. A few lake houses are slipping through appraisal review without any problems, but most home values are getting whacked pretty good at appraisal review. We are currently trying to get set up to do FHA's(I think we just need a 10,000$ bond and waiting for approval, but I don't take care of that shit, so I am not sure), we never needed to do them before, but obviously that's changing. I know they are a headache because I have taken a few to other shops and gotten them done, but you gotta do what you gotta do and 3% down is a lot better than 20%. I sure do hope someone comes up with some new programs soon and if you hear of a bank that has something exciting please let me know. For the life of me I don't understand why CW(and many others after) even started the MTA option arm. It is a great loan for making 3 points on the yield and keeping the payments very low, but too many brokers(including myself) didn't explain exactly how much the balance of the mortgage goes up every time they make that minimum payment. I have been calling everyone I put into an option ARM and explaining to them that they need to make the 15 year payment(or even the 30 yr) as often as they can because they are going to be ass backward when it adjusts due to the values going down so much, but if someone is used to paying 1% it's hard for them to make that adjustment. Neg-am loans are probably the dumbest product ever invented imo, but I have make quite a bit of money off of them. You ever use the option arm?
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« Reply #14 on: August 25, 2007, 02:57:08 PM »

Just closed a SISA MTA arm with Wachovia last month that paid me about $8,000 before taxes. Those have been very rare for me as of late. They are stupid loans but they can at times make sense for the right kind of customer. Such as somone who buys an invesment property in a good area with the intention of flipping it after renovating it. But the average home buyer? Stupid loan for sure.

I will absolutely let you know when I hear of a good specialty program on the horizon. I read your earlier post about First Magnus and I knew what you were going through there. At lot of people I know used those guys quite a bit. I never sent any business to them so i guess I'm glad I didn't need to rely on them. Currently I use Equifirst as my top subprime choice. Their rates suck ass but they still have some decent options. They just bought out HOMEQ and are coming out with some new programs on September 1st that will open up some more flexible options. At least that's what I'm told by my AE.(but I'm sure you already know how AE's can be completely full of shit).

When I know, you'll know Mr Myagi! I would appreciate you telling me in return If you know something. In fact, we should start a thread for any new programs we hear about on the business board.

Deal?

.
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danielson
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« Reply #15 on: August 25, 2007, 03:24:17 PM »

Just closed a SISA MTA arm with Wachovia last month that paid me about $8,000 before taxes. Those have been very rare for me as of late. They are stupid loans but they can at times make sense for the right kind of customer. Such as somone who buys an invesment property in a good area with the intention of flipping it after renovating it. But the average home buyer? Stupid loan for sure.

I will absolutely let you know when I hear of a good specialty program on the horizon. I read your earlier post about First Magnus and I knew what you were going through there. At lot of people I know used those guys quite a bit. I never sent any business to them so i guess I'm glad I didn't need to rely on them. Currently I use Equifirst as my top subprime choice. Their rates suck ass but they still have some decent options. They just bought out HOMEQ and are coming out with some new programs on September 1st that will open up some more flexible options. At least that's what I'm told by my AE.(but I'm sure you already know how AE's can be completely full of shit).

When I know, you'll know Mr Myagi! I would appreciate you telling me in return If you know something. In fact, we should start a thread for any new programs we hear about on the business board.

Deal?

.

Nice loan, congratulations. A guy I work with has a friend that owes a little over 600 grand on a property worth a bit over a million. His buddy lets him re-fi him as often as possible as long it is a no closing costs loan. So he puts him into an MTA about every 4 or 5 months, sets the margin to pay 3 points, gets paid about 18 grand and change on the yield, minus 1300$ or so in closing costs and 30% to the owner and the customer skips 2 months payments and my buddy pockets over 12 grand over and over on this one loan. I can't believe he has never had to pay a recapture fee tbh. He has re-fied him like 5 times in the past 2 years. That's nice that he can count on over 25 grand a year from one customer, I need someone like that Smiley Of course I will keep you informed on anything new, good idea. Oh, and AE's can be full of shit, but they give great gifts man. Concert tickets, Pistons, Lions, take us to strip clubs etc. We have a few cool ones.
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« Reply #16 on: August 25, 2007, 04:34:53 PM »

Danielson

Since im not that deep into the american economy, could you please tell if loans are based in libor + % ? if so, whats the usuar interest rate people is getting over there. Libor +2?
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danielson
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« Reply #17 on: August 25, 2007, 04:38:03 PM »

Danielson

Since im not that deep into the american economy, could you please tell if loans are based in libor + % ? if so, whats the usuar interest rate people is getting over there. Libor +2?

I don't know exactly what they are based on tbh. Average rates right now are high sixes in Michigan.
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benz
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« Reply #18 on: August 25, 2007, 04:45:15 PM »

Would be cool to know, right now im paying like a 3,5% for bank loans for about us$200.000 (180 days but usually paying them within 90) every month
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« Reply #19 on: August 25, 2007, 04:47:36 PM »

Would be cool to know, right now im paying like a 3,5% for bank loans for about us$200.000 (180 days but usually paying them within 90) every month

You are losing me Benz. 200 dollars or 200 thousand? What do you mean 180 days? Are you referring to a mortgage? What country do you live in?
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benz
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« Reply #20 on: August 25, 2007, 04:52:26 PM »

200 thousand, sorry we use . here.

Im into the import/export business, so what i do is to take loans from the bank which must be paid within 180 days and im just paying 3.5% for it right now (even less since 3,5% is just in case i pay it at the end of the time).

Almost forgot it: i live in chile (lol chile)
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danielson
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« Reply #21 on: August 25, 2007, 04:55:58 PM »

200 thousand, sorry we use . here.

Im into the import/export business, so what i do is to take loans from the bank which must be paid within 180 days and im just paying 3.5% for it right now (even less since 3,5% is just in case i pay it at the end of the time).

Almost forgot it: i live in chile (lol chile)

I don't know much about those type of loans. I do have a pretty good idea of what you export though, I may have even tried some of your exports Wink
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« Reply #22 on: August 25, 2007, 04:58:51 PM »

lol what am i supposed to export

I import from china and export just a bit to some prehistoric countries in southamerica such as bolivia, but its nothing you can eat or use.

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« Reply #23 on: August 25, 2007, 05:00:54 PM »

I don't know much about those type of loans. I do have a pretty good idea of what you export though, I may have even tried some of your exports Wink

i don't think you get LIBOR +2 loans for what you have in mind. 
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danielson
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« Reply #24 on: August 25, 2007, 05:00:59 PM »

lol what am i supposed to export

I import from china and export just a bit to some prehistoric countries in southamerica such as bolivia, but its nothing you can eat or use.



I know I was just playing.
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