Subprime mortgage worries

[WRESTLINGFAN]

<p>One of the factors of the recent downturn of the dow has to do with people not being able to pay their mortgages. They were offered teaser rates due to bad credit. As interest rates edged up. so have their mortgage payments causing alot of foreclosures. A lot of economists also say that they do not see a correction in the recent real estate/housing decline in the near future</p><p>&nbsp;<a href="http://news.yahoo.com/s/nm/20070316/ts_nm/usa_subprime_fight_dc">http://news.yahoo.com/s/nm/20070316/ts_nm/usa_subprime_fight_dc</a></p><p>&nbsp;</p>

[Bulldogcakes]

<p>Damn, I wish I had alot of cash right now. If I could, I'd buy as much as I can and rent it out for a few years. There will be a flood of bankruptcies and not enough buyers. Prices will fall, and you could get rich within the next few years when the market stabilizes/rebounds. </p><p>Fuck, I should have sold my place last year like I wanted to. </p>

[patsopinion]

<p>take money out of your home(refi) and put that into another property, build equity in that place and buy another one&nbsp;</p>

[KnoxHarrington]

Maybe this will get the banking industry to do some soul searching and stop relying so much on exploiting the most vulnerable sector of society for new revenue...

Nah, I'm yankin' ya. They'll get Congress to give them trillions of dollars to bail them out of this.

[Bulldogcakes]

<p>Although to be clear, this stuff about subprimes affects certain Wall Street companies and Mortgage firms and is not as huge as some are making it out to be. </p><p>Basically, these mortgages are traded on Wall Street like anything else. If a firm goes under, their mortgages will simply be bought by another company. As long as the houses/properties they're lending the $$ against are still worth about the same amount, then the only one who's in trouble is the Mortgage Seller (not the Banks), and they run on super slim margins. So when you hear this is a X-TRILLION $ market that is affected, dont wet your pants. Not just yet. This doesn't affect the average home owner.</p><p>Here's how it COULD affect things, though. If it gets much harder for people with shaky credit to get loans (which it will since there are already less of these companies) then there will be less buyers for the homes that are out there. That will drive prices down, especially if there's a downturn in the economy. Which many are predicting, including Alan Greenspen recently. Plus, there has been a building boom in NYC lately, so you have more and more supply hitting the market just when less buyers will be available, that will drive prices down as well. Best case scenario, prices will remain flat for a few years while this works itself out. A more likely scenario is homes will sell for around 5-10% less than they are now. But if interest rates go up for any reason, all bets are off. </p><p>This goes into the category of &quot;When the tide goes out, you find out who's been swimming naked&quot;. </p><p>Which I always get a kick out of when these booms go bust. </p> <span class="post_edited"></span> <span class="post_edited"></span> <span class="post_edited"></span> <span class="post_edited"></span><br /><br />

<span class=post_edited>This message was edited by Bulldogcakes on 3-17-07 @ 8:04 PM</span>

[lleeder]

<font size="3">Whats a subprime? Iknow its a dumb question but I have no idea.</font>

[patsopinion]

<p>aaawww lleder</p><p>thats so cute&nbsp;</p>

[Tenbatsuzen]

<strong>lleeder</strong> wrote:<br /><font size="3">Whats a subprime? Iknow its a dumb question but I have no idea.</font><p>&nbsp;</p><p>A rate that is below (sub) the prime rate for banking that is set up by the Federal Reserve.</p><p>&nbsp;</p><p><font face="Arial"><a name="defined"></a>What is the Prime Rate? The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). The rate is almost always the same amongst major banks. Adjustments to the prime lending rate are made by banks at the same time; although, the prime rate does not adjust on any regular basis. </font></p><p>&nbsp;</p>

[KnoxHarrington]

That's true, but a "subprime lender" is one who loans money to people who, using more traditional guidelines for granting credit, would not get a loan. In short, people whose credit would not allow them to get a mortgage normally.

Your gamble here is that you can get enough out of the people who do pay off to compensate for the increased risk of default. But it's not quite working out for them anymore.

[Bulldogcakes]

<strong>Tenbatsuzen</strong> wrote:<br /><strong>lleeder</strong> wrote:<br /><font size="3">Whats a subprime? Iknow its a dumb question but I have no idea.</font><p>&nbsp;</p><p>A rate that is below (sub) the prime rate for banking that is set up by the Federal Reserve.</p><p>&nbsp;</p><p><font face="Arial"><a name="defined" title="defined"></a>What is the Prime Rate? The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). The rate is almost always the same amongst major banks. Adjustments to the prime lending rate are made by banks at the same time; although, the prime rate does not adjust on any regular basis. </font></p><p>&nbsp;</p><p>&nbsp;</p><p>You're way, WAY off here TB. These people are anything but the most creditworthy customers. Quite the opposite.&nbsp; </p>

[Tenbatsuzen]

<strong>Bulldogcakes</strong> wrote:<br /><strong>Tenbatsuzen</strong> wrote:<br /><strong>lleeder</strong> wrote:<br /><font size="3">Whats a subprime? Iknow its a dumb question but I have no idea.</font><p>&nbsp;</p><p>A rate that is below (sub) the prime rate for banking that is set up by the Federal Reserve.</p><p>&nbsp;</p><p><font face="Arial"><a name="defined" title="defined"></a>What is the Prime Rate? The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). The rate is almost always the same amongst major banks. Adjustments to the prime lending rate are made by banks at the same time; although, the prime rate does not adjust on any regular basis. </font></p><p>&nbsp;</p><p>&nbsp;</p><p>You're way, WAY off here TB. These people are anything but the most creditworthy customers. Quite the opposite. </p><p>&nbsp;</p><p>Bulldog, I was defining what the prime rate was.&nbsp; A subprime rate is a rate below the Prime Rate.</p><p>&nbsp;</p>

[Bulldogcakes]

<strong>Tenbatsuzen</strong> wrote:<p>Bulldog, I was defining what the prime rate was. A subprime rate is a rate below the Prime Rate.&nbsp;</p><p>&nbsp;</p><p>It certainly is, but thats not what were talking about here. These are &quot;Subprime Mortgage Lenders&quot;. The &quot;Subprime&quot; refers to the creditworthiness of the borrowers.&nbsp; </p>