{"id":12901,"date":"2010-08-10T12:53:42","date_gmt":"2010-08-10T19:53:42","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=12901"},"modified":"2010-08-10T12:53:42","modified_gmt":"2010-08-10T19:53:42","slug":"that-giant-slurping-sound-is-the-mortgage-market-drying-up","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/12901\/that-giant-slurping-sound-is-the-mortgage-market-drying-up\/","title":{"rendered":"That Giant Slurping Sound is the Mortgage Market Drying Up"},"content":{"rendered":"

Ken Montville<\/a> asked the nagging question<\/a> about the future of the mortgage market:<\/p>\n

Unfortunately, even Congress \u2014 that bastion of liberalism and home of the bailout \u2014 is tiring of pouring good money after bad into the two mortgage giants that have been sucking up all the mortgages \u2014 good and bad \u2014 that private industry is willing to create. To paraphrase one-time third party Presidential candidate, Ross Perot: That giant sucking sound you hear is taxpayer money subsidizing home mortgages.<\/em><\/p>\n

Now, the big questions remains: What will happen next? If there is no Fannie and Freddie to buy up all the mortgages, who will do it? Will the lenders who originate the mortgages be forced to keep them on their books and won\u2019t this further inhibit an already tight credit market?<\/p><\/blockquote>\n

I outlined, a year ago, how the government is retarding a private mortgage banking recovery<\/a> but I said it again for Ken’s benefit:<\/p>\n

\n
\n

\u201cIf there is no Fannie and Freddie to buy up all the mortgages, who will do it?\u201d<\/em><\/p>\n

Nobody will\u2026or everyone will. I\u2019m a \u201clowly retail mortgage originator\u201d with some formal education (and lots of informal education) in economics so consider my opinion with that qualification.<\/p>\n

To use a BawldGuy axiom, lenders lend. Unfortunately, the government, through TARP and artificially subsidized mortgage rates, is creating a situation where lenders prefer arbitrage to lending. It doesn\u2019t take a rocket scientist to borrow guaranteed money at 1% and lend it (with a guaranty) at 4.5%. This is the systemic problem that is distorting the market and arresting any chance of a recovery in lending.<\/p>\n

If the GSEs were allowed to fail, and FHA disappeared, lending would halt\u2026for about 3-4 months. The recovery would be robust, sustainable, and at rates somewhere in the high 5s or lower 6s. Wall Street is taking chances on 5.75%-6% non-guaranteed, mortgage yields right now; there is interest in betting on the American homeowner. Low down payment loans would most likely be gone for about a year. Read more<\/a><\/div>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Ken Montville asked the nagging question about the future of the mortgage market: Unfortunately, even Congress \u2014 that bastion of liberalism and home of the bailout \u2014 is tiring of pouring good money after bad into the two mortgage giants that have been sucking up all the mortgages \u2014 good and bad \u2014 that private […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,26,5],"tags":[],"class_list":{"0":"post-12901","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-investment","7":"category-lending","8":"category-real-estate","10":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":9173,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/9173\/on-mortgages-and-moral-compunction\/","url_meta":{"origin":12901,"position":0},"title":"On Mortgages and Moral Compunction","author":"Sean Purcell","date":"July 14, 2009","format":false,"excerpt":"What would it take for you to walk away from your mortgage?","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":16,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16\/digging-for-the-news-on-interest-rates\/","url_meta":{"origin":12901,"position":1},"title":"Digging for the news on interest rates","author":"Odysseus","date":"November 24, 2005","format":false,"excerpt":"Note this from the Arizona Republic:Mortgage rates around the country, which have been trending upward, dropped this week, offering a dose of good news for prospective home buyers. Mortgage giant Freddie Mac reported Wednesday in its weekly survey that rates on 30-year, fixed-rate mortgages averaged 6.28 percent. That's down sharply\u2026","rel":"","context":"In "General"","block_context":{"text":"General","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/general\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3363,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3363\/dont-learn-all-the-wrong-lessons-about-creative-mortgages\/","url_meta":{"origin":12901,"position":2},"title":"Don’t learn all the wrong lessons about creative mortgages","author":"Greg Swann","date":"July 15, 2008","format":false,"excerpt":"This is my column for last week from the Arizona Republic (permanent link). \u00a0Don't learn all the wrong lessons about creative mortgages Arguably, the Phoenix real estate market is in a state of incipient recovery. Will there be more bad news? Certainly. There are still thousands of homes stuck in\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6458,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/6458\/mortgages-under-management\/","url_meta":{"origin":12901,"position":3},"title":"Mortgages Under Management","author":"Brian Brady","date":"January 5, 2009","format":false,"excerpt":"\"Managing loans\" is the tail that wags the dog today.\u00a0 When I was a rookie stockbroker, the good folks at Mother Merrill taught us to \"gather assets\".\u00a0 Essentially, the firm encouraged us to pitch clients to have their assets transferred to a Merrill Lynch account.\u00a0 The strategy was that assets\u2026","rel":"","context":"In "Interview"","block_context":{"text":"Interview","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/interview\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1147,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1147\/bad-loans-buried-in-the-back-of-the-breadbox\/","url_meta":{"origin":12901,"position":4},"title":"BAD LOANS: Buried In The Back Of The BreadBox","author":"Brian Brady","date":"March 14, 2007","format":false,"excerpt":"Let me tell you a story about how the subprime mortgage market collapsed and millions of baby boomers had to accept less money in retirement. If you liked the Da Vinci Code, you're gonna love this one. It's not wrapped up in sex, or murder, or corruption, just good-old fashioned\u2026","rel":"","context":"In "Enduring Interest"","block_context":{"text":"Enduring Interest","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/enduring-interest\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6980,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/6980\/bankrupt-ideas-for-changing-bankruptcy\/","url_meta":{"origin":12901,"position":5},"title":"Bankrupt Ideas for Changing Bankruptcy","author":"Sean Purcell","date":"February 20, 2009","format":false,"excerpt":"Two excerpts from a local article:\u00a0 Bankruptcy reform could help hard-up homeowners Overwhelmed by debt from credit cards, a $536-a-month truck payment, $8000 in overdue property taxes and two mortgages, the single homeowner is hoping (San Diego bankruptcy attorney) Colwell can remove the $84,000 second loan on his home, which\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/12901","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=12901"}],"version-history":[{"count":10,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/12901\/revisions"}],"predecessor-version":[{"id":12912,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/12901\/revisions\/12912"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=12901"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=12901"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=12901"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}