{"id":17256,"date":"2020-10-06T10:03:25","date_gmt":"2020-10-06T17:03:25","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=17256"},"modified":"2020-10-06T12:23:48","modified_gmt":"2020-10-06T19:23:48","slug":"the-real-estate-correction-of-2021","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/17256\/the-real-estate-correction-of-2021\/","title":{"rendered":"The Real Estate Correction of\u00a02021"},"content":{"rendered":"

\"\"Over 13 years ago<\/a>, I tried to explain how mortgage securitization would cushion losses to investors and lessen the negative effects of mortgage defaults to real estate prices:<\/p>\n

Basically, the Titans of Wall Street never had to answer for the performance of these loans because the money managers wanted that last little bit of yield the risky or exotic mortgages produced. The rising housing market would disguise the loose guidelines (defaults would just be refinanced) and everyone would make their little golden crumbs as the vanishing loaf was buried deep in the breadbox. If that wasn\u2019t enough, the lenders would buy securities firms and the securities firms would buy lenders, all of them buying time before the cat got out of the bag.<\/p>\n

Then Alan Greenspan raised interest rates and all hell broke out. Rapid growth in housing arrested and the refinance boom stopped. Alas, the lenders and Wall Street Titans kept the easy money machine flowing. Think about it, it wasn\u2019t their money, it is yours\u2026so why close the bar tab if you never intend to pay it ?<\/strong><\/p>\n

Now\u2026here is the part where you should be infuriated but don\u2019t have to be\u2026 This crap has been buried in so many funds that it won\u2019t have too much of a lasting effect. The debacle that we read about will be paid for by you, Mr. and Mrs. America with the $57,254 balance in your IRA account. And it is going to hurt you, probably to the tune of two or three grand. That means these HUGE default rates we read about MAY lower your IRA balance to $54,819 next year. If you\u2019re 50 years old, it means that the monthly check you draw from that IRA when you are 70 years old WILL be some 38 bucks lighter because of this mess.<\/p><\/blockquote>\n

I was correct in THEORY but things never work out theoretically, right?\u00a0 Just 18 months later. I posted that same article with a Mea Culpa<\/a>:<\/p>\n

I\u2019m kicking\u00a0this one\u00a0up to the top, in honor of today\u2019s events.\u00a0 It\u2019s a historical look about the early MBS markets.\u00a0 Now before you jump me for my incorrect Read more<\/a><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Over 13 years ago, I tried to explain how mortgage securitization would cushion losses to investors and lessen the negative effects of mortgage defaults to real estate prices: Basically, the Titans of Wall Street never had to answer for the performance of these loans because the money managers wanted that last little bit of yield […]<\/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-17256","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":1042,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1042\/is-the-subprime-mortgage-market-the-next-enron\/","url_meta":{"origin":17256,"position":0},"title":"Is the Subprime Mortgage Market the next Enron?","author":"Brian Brady","date":"February 13, 2007","format":false,"excerpt":"An excerpt from one of my recent posts on The Active Rain Real Estate Network: The sub-prime mortgage market is falling apart. Wall Street firms are being stung by the bad sub-prime loans they bought and have demanded that the sub-prime lenders buy those loans back. The sub-prime lenders didn't\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":7402,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7402\/if-i-never-make-a-single-payment-on-my-super-cheap-fha-loan-do-i-still-get-my-8000-tax-credit\/","url_meta":{"origin":17256,"position":1},"title":"“If I never make a single payment on my super-cheap FHA loan, do I still get my $8,000 tax credit?”","author":"Greg Swann","date":"March 8, 2009","format":false,"excerpt":"WAPO:The last time the housing market was this bad, Congress set up the Federal Housing Administration to insure Depression-era mortgages that lenders wouldn't otherwise make. This decade's housing boom rendered the agency irrelevant. Americans raced to aggressive lenders, seduced by easy credit and loans with no upfront costs. But the\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":[]},{"id":1250,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1250\/a-farewell-to-arms-one-less-option\/","url_meta":{"origin":17256,"position":2},"title":"A Farewell to ARMs: One Less Option","author":"Brian Brady","date":"April 1, 2007","format":false,"excerpt":"Are Option ARMs the next casualty in the non prime mortgage meltdown war? Wall Street fired the shot heard 'round the world in the mortgage default war by demanding repurchases from subprime lenders. Lenders either closed their doors or waved the white flag and allowed the conquering army to annex\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"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":17256,"position":3},"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":12659,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/12659\/so-what-if-lenders-are-lousy-at-judging-character-who-cant-identify-fat-people-when-they-sitting-on-the-other-side-of-your-desk\/","url_meta":{"origin":17256,"position":4},"title":"So what if lenders are lousy at judging character? Who can’t identify fat people when they’re sitting on the other side of your desk?","author":"Greg Swann","date":"July 13, 2010","format":false,"excerpt":"Who says all academics are mindless time-wasters? A pair of brave scholars have demonstrated a correlation between obesity and mortgage defaults. A bad credit report is good evidence of insufficient thrift, but a good credit report is evidence of nothing dispositive. A bulging waistline, on the other hand...We show that\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":[]},{"id":1555,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1555\/subprime-lending-fallout-goes-upstream-to-take-down-two-major-hedge-funds-what-does-this-mean-to-real-estate-investors\/","url_meta":{"origin":17256,"position":5},"title":"Subprime Lending Fallout Goes Upstream to Take Down Two Major Hedge Funds: What does this Mean To Real Estate Investors?","author":"Cooksquared","date":"June 20, 2007","format":false,"excerpt":"Two major Bear Stearns Hedge Funds face foreclosure due to their significant exposure to the subprime lending market. While this does not fall under the category of real estate investor, I spent last summer working for Bear Stearns and interacting with many of their hedge funds. Based on the very\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/17256","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=17256"}],"version-history":[{"count":3,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/17256\/revisions"}],"predecessor-version":[{"id":17261,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/17256\/revisions\/17261"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=17256"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=17256"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=17256"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}