Investment Mortgage Guy

What does Fannie Mae, Freddie Mac, Lehman Brothers and AIG have in common?

They are all suffering huge unforseen losses from mortgages that are going delinquent. Add a major housing slump, a hint of recession and a dash of credit crunch and you have a recipe for disaster in the mortgage world. For years, borrowers who fell behind on mortgages and bills tapped their good friend Mr Equity to bail them out of trouble. Their homes were turned into ATM machines and coverd up some real fundamenal issues for many Americans and their spending and saving habits.

But the little guy isn’t the only one to blame. Mortgage Brokers bloomed on every street corner helping the average guy tap his Equity Tree, assuring him that the lower payments will definately save him from his troubles.

But then of course we had the wholesale lenders who encouraged the broker to be extremely agressive in originating loans. They created loans products that made no common sense but since everyone was doing it, it seemed ok.

And don’t leave out Wall Street, who rated these bonds very high since they had a low default rate for many years. They cut too many corners on underwiting the true risk of these loans, lining thier pockets with the profits.

So back to my question, how will the bankruptcy of Lehman brothers affect your mortgage? If you have a mortgage now and never get another one. You will be fine. It shouldn’t affect you very much. If you will need another mortgage down the road, don’t get freaked, but be prepard to demonstrate your ability to repay. The loans of the future will require complete background checks and a solid credit rating. Provable income and asset reserves will also be required. You can also expect them to be tough on your collateral. But hey - what do you expect when this mess is going to cost billions and billions to America.

Written by

Rob Bonahoom
Mortgage Coach
952-808-2820
rbonahoom@houseloan.com