Archive for June, 2009
Subprime Mortgage Crisis – A 360º Look
June 30th, 2009
The subprime mortgage crisis has triggered the US recession and home prices down. Many people end up with upside down mortgages as a result. At first, it was a subprime crisis, affecting only banks and homeowners with subprime mortgages. But then the problem spread and now even people with prime mortgages are suffering. This book called Financial Shock: A 360º Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis discusses in detail the extent of the subprime mortgage crisis.
Review
As seen on NBC's Meet the Press, CBS Sunday Morning, CNN's Your $$$$$, CNN's Issue #1, CNBC's Squawk Box, CNBC's Kudlow & Company and Fox Business with Dagen McDowell
"The obvious place to start is the financial crisis and the clearest guide to it that I’ve read is Financial Shock by Mark Zandi. ... it is an impressively lucid guide to the big issues."
--The New York Times
"In Financial Shock, Mr. Zandi provides a concise and lucid account of the economic, political and regulatory forces behind this binge."
–The Wall Street Journal
“Aggressive builders, greedy lenders, optimistic home buyers: Zandi succinctly dissects the mortgage mess from start to (one hopes) finish.”
–U.S. News and World Report
"A more detailed look at the crisis comes from economist Mark Zandi, co-founder of Moody's Economy.com. His "Financial Shock" delves deeply into the history of the mortgage market, the bad loans, the globalization of trashy subprime paper and how homebuilders ran amok. Zandi's analysis is eye-opening. ... he paints an impressive, more nuanced picture."
--Kiplinger's Personal Finance Magazine
Book Description
"The obvious place to start is the financial crisis and the clearest guide to it that I've read is Financial Shock by Mark Zandi...it is an impressively lucid guide to the big issues." --The New York Times "In Financial Shock, Mr. Zandi provides a concise and lucid account of the economic, political and regulatory forces behind this binge." --The Wall Street Journal "Aggressive builders, greedy lenders, optimistic home buyers: Zandi succinctly dissects the mortgage mess from start to (one hopes) finish." --U.S. News and World Report "A more detailed look at the crisis comes from economist Mark Zandi, co-founder of Moody's Economy.com. His "Financial Shock" delves deeply into the history of the mortgage market, the bad loans, the globalization of trashy subprime paper and how homebuilders ran amok. Zandi's analysis is eye-opening...he paints an impressive, more nuanced picture." --Kiplinger's Personal Finance Magazine "If you wonder how it could be possible for a subprime mortgage loan to bring the global financial system and the U.S. economy to its knees, you should read this book. No one is better qualified to provide this insight and advice than Mark Zandi." --Larry Kudlow, Host, CNBC's Kudlow & Company "Every once in a while a book comes along that's so important, it commands recognition. This is one of them. Zandi provides a rilliant blow-by-blow account of how greed, stupidity, and recklessness brought the first major economic crises of the 21st entury and the most serious since the Great Depression." --Bernard Baumohl,Managing Director, The Economic Outlook Group and best-selling author, The Secrets of Economic Indicators "Throughout the financial crisis Mark Zandi has played two important roles. He has insightfully analyzed its causes and thoughtfully recommended steps to alleviate it. This book continues those tasks and adds a third--providing a comprehensive and comprehensible explanation of the issues that is accessible to the general public and extremely useful to those who specialize in the area." --Barney Frank, Chairman, House Financial Services Committee The subprime crisis created a gigantic financial catastrophe. What happened? How did it happen? How can we prevent similar crises from happening again? Mark Zandi answers all these critical questions--systematically, carefully, and in plain English. Zandi begins with a fast-paced overview and then illuminates the deepest causes, from the psychology of homeownership to Alan Greenspan's missteps. You'll see the home "flippers" at work and the real estate agents who cheered them on. You'll learn how Internet technology and access to global capital transformed the mortgage industry, helping irresponsible lenders drive out good ones. Zandi demystifies the complex financial engineering that enabled lenders to hide deepening risks, shows how global investors eagerly bought in, and explains how flummoxed regulators failed to prevent disaster, despite crucial warning signs. Most important, Zandi offers indispensable advice for investors who must recognize emerging bubbles, policymakers who must improve oversight, and citizens who must survive whatever comes next. *Liar's loans, flippers, predatory lenders, delusional homebuilders How the housing market came unhinged, and the whirlwind came together*Alan Greenspan's trillion-dollar bet Betting on the boom, ignoring the bubble*The subprime market goes global Worldwide investors get a piece of the action--and reap the results*Wall Street's alchemists: conjuring up Frankenstein New financial instruments and their hidden contents*Back to the future: risk management for the 21st century Respecting the "animal spirits" that drive even the most sophisticated markets
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Posted in Behind On Mortgage, Predatory Lending, Subprime Mortgages, Understanding Mortgages | 
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What Should I Write to Loss Mitigation Department?
June 29th, 2009
I'm going to submit a written offer for a property to the loss mitigation department. In my letter, I would like to explain that I'm submitting the offer for that amount because of current market conditions. What should I write? How should I phrase my offer so that they are more likely to accept it? I heard that there is an industry standard of what to do when contacting the loss mitigation department of a bank.
Posted in Loss Mitigation, Loss Mitigation Consultant, Loss Mitigation Department, Upside Down Mortgage FAQs |
Tags: accept offer, bank, banks loss mitigation, communidate with loss mitigation, current market, current market condition, explain to loss mitigation, industry standard, letter, letter to loss mitigation, letter to loss mitigation department, Loss Mitigation, loss mitigation accept offer, Loss Mitigation Department, loss mitigation dept, loss mitigation officer, market condition, phrase offer, sending letter to loss mitigation, submit an offer, submit offer, submit offer to loss mitigation department, talk to loss mitigation, what should i write, write to loss mitigation, write to loss mitigation department, written offer |
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Mortgage Default Swaps
June 29th, 2009
Mortgage Default Swaps
Commercial mortgage rates are essentially the combination an index and the margin that the bank charges. Borrowers should be careful on how the term sheets are written, in regards to quoted rates. Below are a few suggestions on how you can protect yourself against bait and switch moves that some lenders still use regarding commercila mortgage rates.
First of all, an indexes commonly used in the commercial mortgage industry includes Prime and the 10 Year Treasury. Less well known indexes such as the 5 Year Swap or the FHLB indexes are becoming more popular.
The margin is where the bank makes its spread. It is a very complicated process for banks to figure out what to charge as they basically have to predict the future and take into account the probability of default, adequately cover their costs, and of course try to make a profit. At the same time the industry is highly competitive and they have to price out their loans “skinny” enough to be able to bring in new borrowers.
The combination of the margin and index is commonly referred to as the Effective Rate. It’s what the borrower will use to calculate their payments and what they normally think of when they ask for rate quotes. For example if a bank quoted you Prime plus 1% your Effective Rate would be 6% as prime right now is at 5%.
The main suggestion regarding not having your rate bumped up on you while your loan is in process is to have both the margin and index clearly written on the term sheet. The opposite is to just have the effective rate quoted with no mention as to either the margin or the index. If either or both go down for example, you would not know, and would not know that your rate should be lower. The lender could simply keep your rate the same and you would have no recourse or really any way of knowing.
A worse scenario would be to have your rate increase during process. Rate locks are rare in the commercial mortgage industry so it is possible for the funding bank to call you with the bad news that your rate will be higher. In fact, as of this writing 5/8/8, it’s not that uncommon at all, as banks are constantly rethinking what they can and what they want to lend on – due to the credit crisis. And many will have the attitude of, take it or leave it. More to the point though if the margin and index are not clearly known the lender could mention any margin or index when challenge to “cover” his story.
Get it in writing or assume they will try the bait and switch on your commercial loan rate.
About the Author:
Jeff Rauth is President of Commercial Finance Advisors, Inc 248 885-8797 or at SBA 7a Loans or commercial loan rates or commercial loan calculator
Source - Commercial Mortgage Rates
Cause of Stock Market Crash? Credit Default Swap Scandal