Out at the peak

Wednesday, September 06, 2006

Homebuilders promoting toxic loans

Homebuilders are accumulating inventory. In order to move this inventory, they are willing to promote non-conforming loans to people who could not afford a conforming loan.

Centex Homes: Affordability Days
Ryland Homes: 40% off mortgage payments
(Thanks Bubble Meter)

Home buyers: my suggestion is if you cannot afford to make payments on a 30 year fixed mortgage, then you simply cannot afford that house. Actual affordability is virtually gone, and once buyers stop risking their financial credibility with non-conforming loans, house prices will have to realign with reality.

Please link to other similar promotions you come across.

posted by Out at the peak at 1:31 PM

2 Comments:

  • Many lenders agree to repurchase loans back from the larger institutions if the borrower does not perform. They have already set aside some money for those events. However, the events will likely be in greater number than they expect.

    Fannie Mae and Freddy Mac supposively only carry conforming loans that do not exceed the jumbo limit. I could imagine new scandles that make this not true, but who knows?

    Washington Mutual will probably be one of the bigger names in dire times. (They have a C+ rating due to their dealings with exotic loans.) But the bad news will be wide spread, and more research needs to be done to figure out what is mostly a risk.

    By Blogger Out at the peak, at 11:23 PM  

  • “How Toxic Is Your Mortgage?" is what all are concerned of nowadays.
    Thanks for that interesting information here.

    Regards,
    new homes Wisconsin

    By Blogger Unknown, at 11:52 PM  

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