Very true. Credit will be extended only to those with wants but not needs.

My only consolation is today seeing people look at 14% “ceilings” in their mortgage agreements and laughing because rates will never go that high. They will for the worst borrowers and who are considered the worst borrowers will steadily expand. At this point I forsee an “assigned risk pool” for paper just like we see for auto insurance.

SoCalMtgGuy sees the problem; mortgage rate relief cannot be given only to the “needy.” Indeed the needy would have to be last in line not first. Those of us with the resources and experience and vision would kill all lending profitability with our transactions before the FBs got their first dime. If I may, one of the biggest reasons refinancing, short sales, restructuring, etc. won’t help is because the intermediaries are paid too much. Any relief is adsorbed in the transaction loses.

All they are selling is to lock in a 30yr fixed today…before rates are higher tomorrow. The conventional wisdom is that rates are going up…so don’t wait, refi now. If you wait, you will get a higher rate.

They will say ‘anything’ to get in contact with people. Most people don’t know what kind of loan they have in the first place.
If they hear they can ‘lower their payments’ they will call. Lots of people can’t be ‘helped’ by lower payments at this time…but they won’t know unless they call.

SoCalMtgGuy

I’m hearing ads by mortgage companies
“lower your payment with our new 30 fixed mortgage”

what is the deal with that. it also says ” interest rates are rising, dont get caught with higher payments”

whats up with that?

how can they promise to lower payments when some one switches over to 30yr fixed from current adjustable rate?

I don’t know - Treasuries represent future tax receipts so it’s hard to imagine an outright default, though of course we can destroy the currency in which they’re paid.

Fannie and Freddie, OTOH, have no explicit guarantees. If the MBSes default, are we going to let the Chinese and Japanese repossess all those houses?

As someone pointed out on Ben’s blog a while back, maintaining the world’s reserve currency is more valuable to the powers that be than bailing out Joe “Homeowner”.

I too would like to know why FCBs have made this shift though. My guess is that we simply asked them to help bail out Fannie Mae if they wanted to keep the party going.

It seems to me, though, that FCBs are playing a similar role to the American public in the financial merry-go-round of the 1920s. Americans bought German bonds (which were SUPPOSEDLY backed by German assets), Germany paid reparations to the Allies, and the Allies paid their war debts to American bankers. The difference, of course, is that the bankers WERE getting repaid (in addition to their underwriting fees and sales commissions on the German bonds) while the public, as always, was left holding the bag.

What is amazing is the scandal at FNMA and FHLMC. They have not filed SEC docs and their earnings are suspect to say the least. That is the real time bomb.