Your Questions About Mortgage Rates News

William asks…

Is “Credit Crisis” For Real?

Is the reported credit/liquidity crisis just another phony “weapons of mass destruction” ploy being used to manipulate the public into a hidden agenda?

I don’t have the answer. But I listen to and read the news and surf the internet and come up empty on this question (unless you put stock in endless, unsubstantiated assertions or think that the stock market and liquidity are synonymous).

I’m not talking about the credit crisis confronting financial firms which have recklessly gambled their and their clients’ money and lost. I’m talking about the man on the street and sound, well managed businesses.

You would think that if the crisis exists, interest rates would be up. However, home mortgage rates are still at historical lows and they, as well as investment grade corporate bond rates, have not dramatically increased (1).

You would also think that business bankruptcies would be up but that does not appear to be the case (2).

I’m not really familiar with M1, the government’s money supply statistic, but that also does not appear to have declined (3).

As I say, I don’t have the answer. But just assume that there really is a credit crisis. Why in the world would you relieve it by taking the questionable assets off the hands of the improvident (and, as a result, empty pocketed) firms that created the crisis and assume that their renewed prosperity would “trickle down” and the world would be back to normal.

Why not, instead, take the same $700 billion and make it available for borrowing directly by the man on the street and well managed businesses who have had a hard time finding it elsewhere? It’s not like the government doesn’t know how to lend money where it will do good, e.g. student loans, small business loans, FHA housing loans.

Lax oversight and laissez faire carried to the extreme let the wolves in the chicken coop. So what does the government propose to do? Feed the wolves more chickens.

(1)
http://www.federalreserve.gov/releases/h15/data.htm

(2) http://www.abiworld.org/AM/Template.cfm?Section=Business_Bankruptcy _Filings1&Template=/TaggedPage/TaggedPageDisplay.cfm&TPLID=59&
ContentID=36301

(3)
http://www.federalreserve.gov/releases/h6/current/

admin answers:

I think it’s for real , yeah

we’ve seen nothing like this for a long time

since the South Sea bubble?

Lisa asks…

What is it like in America? are people losing their homes as well?

Measures To Avoid Repossessions
Wednesday, October 22 04:17 pm

Sky News Print Story
Measures to help people avoid losing their home if they have trouble paying their mortgage have been unveiled. Skip related content
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New court protocols will help to make repossessions a last resort and lenders will be expected to show they have tried to discuss and agree alternatives with people who get into difficulty with repayments.

The Government is also proposing that companies involved in sale and rent back schemes, which may target vulnerable home owners, should be brought under regulation of the Financial Services Authority. Around 18,900 people lost their homes during the first half of the year, 48% more than during the same period of 2007 and the highest figure since 1996.

The level of repossessions is expected to continue rising during the second half of the year to reach 45,000 for the whole of 2008
On the television to-night one man’s home was being repossessed because he owed £ 250 00,
to me that is a disgrace.

admin answers:

HI ? – Dr. W. Has it right. Tonight on the news it is reported that 2 in 5 homeowners in Florida are in foreclosure and the numbers are very similar in California. However, people all over the USA are losing their homes, a lot have lost jobs and even more have no money put aside for a rainy day! And right now it’s pouring!
We are definitely looking toward a depression of sorts – even my pension from my company has been affected – because it is invested in the “market” my check was light $241.00 this month. And as I also get a pension check from Britain (I worked there for a while) that has been light too – minus $30.00 last month! I pray every night that some brilliant person will come along and financially sort out this mess! Good Q.
Have a star! CJ

Maria asks…

Can I get a car loan with bad credit?

A few months ago, I got hit with the whole sub-prime mortgage thing and my mortgage rates shot up. I wasn’t able to afford it so I had to really strech and make my payments at the expense of some other bills (credit cards, cell phone, etc). The good news is that I was able to sell my place in a couple of months without foreclosing or anything (paid in full). But now, the month or so after the sale, I’m getting credit limit reductions from credit cards since I missed those payments and one even got closed (it was just a store card but still looks bad, I know).

Now, I told you that story to ask you this – I need a car and want to buy something nice. Since I’m pretty sure I can’t afford a nice NEW car, I’ll be getting a used one for about $15K. What are my chances with a loan from the bank with all the stuff I mentioned earlier? All that stuff happened only a month or two ago. My income is good and I have gotten back on track with finances. My credit score is between 600 – 618.

admin answers:

This is based on information from SPIFIMAN1:

Auto loans are based on the following factors:

1. LTV (loan to value).
2. Term of loan.
3. Age of vehicle.
4. Miles on vehicle.
5. Down payment.
6. Time at job.
7. Time at residence.
8. Monthly income before taxes.
9. Credit score/profile.
10. Total debt to income ratio.

What auto lenders look for is as follows;

1. 3-5 years in the bureau depending on the lender.
2. 4-open trade lines paid as agreed.
3. 1-installment loan paid 12-times for at least $150.00 a month.
4. 2-years on the job and at residence.
5. 10% or $1,000.00 down payment.
6. Monthly income of at least $1,800.00.
7. Vehicle not over 5-years old with less then 50,000 miles.
8. Monthly payment not to exceed 20% of monthly income.
9. Total debt to income not to exceed 45%.
10. LTV between 115% and 145%.

For prime rates you need a FICO score of 680 or above.

I am sure you will be able to get a car loan (with a somewhat high interest rate), but I would recommend saving money for a car with your own cash. That way you won’t have to worry about a car payment for the next 4-5 years, and the interest that comes along with it.

Ken asks…

Isn’t it good to see the Justice Dept. investigating Standard and Poors?

Rather than the black panthers outside of the polling area, Maxine Waters and the “fast and furious” gun giveaway?

The Justice Department reportedly is investigating Standard and Poor’s to see whether the nation’s largest credit ratings agency improperly rated mortgage securities prior to the financial crisis. The New York Times says the probe started before S&P downgraded the nation’s credit rating earlier this month.
http://www.npr.org/2011/08/18/139735812/business-news

admin answers:

No. I feel like we are living in a Police State and Heaven help any that dare speaks out against the Great One..

Betty asks…

Why is S&P still giving Subprime Mortgage Backed securities AAA ratings?

“he credit ratings agency Standard and Poor’s is now awarding higher credit standings to securities backed by subprime mortgages than to the U.S. government’s debt, Bloomberg News reports.

On August 5, Standard and Poor’s downgraded the U.S. credit from a triple-A rating to a double A-plus rating for the first time in history.

Now, according to Bloomberg, “S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties.”…”

http://www.cbsnews.com/8301-503544_162-20099897-503544.html

admin answers:

…hey Justice Department, how’s that probe coming along?

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