I wonder if this crash could be bigger than 2008. Foreclosures drove that due to predatory lending. But now more so than back then more people can't pay their mortgage and are behind on them. Hmmmm....
Flipper/Rehabber · Leominster, MA · Member since 2020 · 667 posts · 384 votes
6y
Jack,
I do not think we are looking at 2008 again.
Three reasons: (1) the federal government is still in the driver's seat with Fannie Mae & Freddie Mac, so those mortgages will get deferred or worked out in some way; politicians got killed last time for the foreclosure rate, so they are not going to let it happen again and (2) the fundamental structure around loan origination is a million times better than it was in the run up to 2008; between 01 - 07 you did not need a license to originate a loan once Dodd-Frank passed and licensing became the standard a lot of bad loan officers got out of the business, and (3) Banks also tightened up their verification standards ( I know the standards are still relatively loose) but 4506T forms were not used between 01 - 07, so people lied about their income; after 2008, banks started to use 4506T forms to verify tax returns. Verifying taxes alone makes a huge difference in the quality of the underwriting.
Flipper/Rehabber · Leominster, MA · Member since 2020 · 667 posts · 384 votes
6y
Jack,
I do not think we are looking at 2008 again.
Three reasons: (1) the federal government is still in the driver's seat with Fannie Mae & Freddie Mac, so those mortgages will get deferred or worked out in some way; politicians got killed last time for the foreclosure rate, so they are not going to let it happen again and (2) the fundamental structure around loan origination is a million times better than it was in the run up to 2008; between 01 - 07 you did not need a license to originate a loan once Dodd-Frank passed and licensing became the standard a lot of bad loan officers got out of the business, and (3) Banks also tightened up their verification standards ( I know the standards are still relatively loose) but 4506T forms were not used between 01 - 07, so people lied about their income; after 2008, banks started to use 4506T forms to verify tax returns. Verifying taxes alone makes a huge difference in the quality of the underwriting.
I wonder if this crash could be bigger than 2008. Foreclosures drove that due to predatory lending. But now more so than back then more people can't pay their mortgage and are behind on them. Hmmmm....
Much, much worse. It won't be predatory lending this time. It will be unemployment. People without jobs can't pay rent or mortgage. Buckle up. Look about the September 2020 timeline. Things will be bad enough they will backstop it one again and kick the can down the road until after the election. Then surprise, surprise . . . "what can never happen again, will".
Three reasons: (1) the federal government is still in the driver's seat with Fannie Mae & Freddie Mac, so those mortgages will get deferred or worked out in some way; politicians got killed last time for the foreclosure rate, so they are not going to let it happen again and (2) the fundamental structure around loan origination is a million times better than it was in the run up to 2008; between 01 - 07 you did not need a license to originate a loan once Dodd-Frank passed and licensing became the standard a lot of bad loan officers got out of the business, and (3) Banks also tightened up their verification standards ( I know the standards are still relatively loose) but 4506T forms were not used between 01 - 07, so people lied about their income; after 2008, banks started to use 4506T forms to verify tax returns. Verifying taxes alone makes a huge difference in the quality of the underwriting.
That's a great explanation but nothing you said has any relevance....because people are losing that "verified income" due to the shut downs...Is it hard to understand that shut downs = job losses and job losses = foreclosures and evictions?? Not sure how peoples income verification from years ago when they bought these houses has any relevance to this when they no longer have said jobs....
I wonder if this crash could be bigger than 2008. Foreclosures drove that due to predatory lending. But now more so than back then more people can't pay their mortgage and are behind on them. Hmmmm....
Much, much worse. It won't be predatory lending this time. It will be unemployment. People without jobs can't pay rent or mortgage. Buckle up. Look about the September 2020 timeline. Things will be bad enough they will backstop it one again and kick the can down the road until after the election. Then surprise, surprise . . . "what can never happen again, will".
Yay! Someone who gets it! Shutdowns caused job losses and we are about to see a wave of foreclosures in the next year or two...
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
6y
@Jack B. it may get bad, but this data doesn't yet prove it. You can't so aggressively market and fund deferments and forebearances and not expect people to sign up for them. The high rate is a function of that.
Now, how many will come out whole? Not everyone thats for sure, but the banks have lots of incentive to work with them and the federal credit to do it. And interest rates continue to decline--look at the refinance boom. I don't think we will be looking at a wave, certainly not within the next year but maybe instead a slow leak in the hot air balloon as the next year turns into two.