Comments on: Couldn’t Help But Notice (031908) http://www.bizzyblog.com/2008/03/19/couldnt-help-but-notice-031908/ The Business End of the Blogosphere Tue, 14 Oct 2008 00:31:36 +0000 http://wordpress.org/?v=2.5 By: TBlumer http://www.bizzyblog.com/2008/03/19/couldnt-help-but-notice-031908/#comment-121223 TBlumer Wed, 19 Mar 2008 16:51:35 +0000 http://www.bizzyblog.com/2008/03/19/couldnt-help-but-notice-031908/#comment-121223 #1, I expect that banks will start asserting credit-card type rights to raise rates if a borrower misses a few payments and to write in universal default clauses. #1, I expect that banks will start asserting credit-card type rights to raise rates if a borrower misses a few payments and to write in universal default clauses.

]]> By: dscott http://www.bizzyblog.com/2008/03/19/couldnt-help-but-notice-031908/#comment-121222 dscott Wed, 19 Mar 2008 15:51:53 +0000 http://www.bizzyblog.com/2008/03/19/couldnt-help-but-notice-031908/#comment-121222 "speculative buyers nominal title" Nice quote. The problem with any economic sector occurs when everyone feels they can game the system to make a profit because of the obvious few who gained so handsomely. The housing/mortgage industry became a pyramid scheme when successively more people began rushing head long into the speculative market. Profits always attract more players. Here is one aspect your author missed: A number of people when faced with not being able to unload a home decided not to stay put but instead bought another one anyway by using the remaining LTV of their home for the downpayment on the next home. Once they got the loan and moved out to the new home, they ditched the first home to the bank. What did they care of their credit rating once they got the new place? The bank couldn't rescind the new loan or change the interest rate due to the change in credit status. The upshot will be these predatory borrowers will be stuck in that home for 7 to 10 years due to record keeping of the credit bureaus. The problem is in 7 to 10 years, this group will be back to start the next down cycle of the mortgage market. Mark my words! “speculative buyers nominal title” Nice quote.

The problem with any economic sector occurs when everyone feels they can game the system to make a profit because of the obvious few who gained so handsomely. The housing/mortgage industry became a pyramid scheme when successively more people began rushing head long into the speculative market. Profits always attract more players.

Here is one aspect your author missed: A number of people when faced with not being able to unload a home decided not to stay put but instead bought another one anyway by using the remaining LTV of their home for the downpayment on the next home. Once they got the loan and moved out to the new home, they ditched the first home to the bank. What did they care of their credit rating once they got the new place? The bank couldn’t rescind the new loan or change the interest rate due to the change in credit status. The upshot will be these predatory borrowers will be stuck in that home for 7 to 10 years due to record keeping of the credit bureaus. The problem is in 7 to 10 years, this group will be back to start the next down cycle of the mortgage market. Mark my words!

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