Rosen Says SubPrime Rates Need To Be Locked by Federal Government
An interesting interview on the risk that is coming down the pike by Ken Rosen. His philosophy is to lock in the loans that are turning toxic. I am not sure if I agree completely with him. If they do not allow the ARMs to adjust, they will be worth a great deal less on the market. While there is a risk of bad loans on their books, changing the rules now would create a big problem.
By changing the rules of the game the law of unintended consequences kicks in. What is something the market understands, bad loans and a risk of foreclosure, could create a firestorm if the markets do not get any appreciation on money lent.
He does have an interesting point on the credit crunch impacting subprime credit card debt.
Direct link to video at MarketWatch.
I like your analogy in this article. The real estate economy really is like a patient who you cannot ...
Real Estate is hyper-local. Every market is different. Phoenix has already hit bottom and is starting to recover. We have ...
Great to hear that the big boys
are predicting recovery sooner than
most think.
Thanks for the value! 
I agree--good analogy. You have to crawl before you can walk. Right now, at least in Austin, many people would ...
I live in the Philippines and I am glad we are not on the lists... 
I have a few Litograghs of Presidents homes , made by Richard V. Sebring. yr. 1990 Do they have any ...
I see the question I have, but no response. I do not have a for sale sign up ...
I'll add mine to the list too. This is happening in Kansas City, Missouri as well now.
We already knew ...
Comment by Waste Watcher on 16 August 2007:
MORE TAX MONEY WASTED..
Da Mayor is planning on bulldozing another park. This one is on the corner of 47th and King Drive. It is rumblings that da City is going to strike at midnight like they did Meig’s Field. The $1.5 million park is 90 percent finished, complete with 10 feet granite slabs and pipes and wiring.
http://abclocal.go.com/wls/story?section=local&id=...
What a watse of money.
Comment by RE Investor on 17 August 2007:
I have to disagree. At this point there is already a huge problem. You are assuming that if you change the rules then they will not earn the returns. That is not even a question any more. Basically the answer now on these loans is – adjust and borrower walks, lender stuck with loss of principal loaned and a loss for sales commission IF they can even sell. At least if you don’t adjust, and the borrower has been paying well for the last 2 years, then you will make SOME return on the money as a CDO investor and the market will have less inventory due to less foreclosures. Then borrower can refinance when market improves. Investor will get back their principal plus a couple more years interest. If they continue to adjust upwards, in a deflactionary market, they will just force more people out, and hence more losses. We have already tested the status quo, and we all know how that is going. The worst part is that the banks know this, the scenario playing out now is a game of chicken between the Fed and Wall Street. Wall Street feels that if they continue to foreclose, only a few originators will fold, but the big wall street hedges that bought this paper will survive. The more the hedges do nothing, the more folks end up on CNN and FOX news telling the stories of foreclosures, and the political pressure will build and the fed will blink and lower rates. When they lower rates, they are calculating on stocks to rise, mitigating their losses and making their junk paper worth more and they will not have to mark to market at .20 on the dollar. Unfortunately in the interim lots of people will lose their homes, the do-nothing congress will talk it to death but do-nothing, and those of us that own homes and financed properly will have to endure our neighborhoods full of empty homes with tall weeds because Wall Street won’t blink.
Just my 2 cents having invested in all of the above for a while.
Comment by Sam Chapman on 18 August 2007:
We need less, not more, government involvement. Bad lending practices, as long as they are legal, are a problem, but the market will correct itself. I realize that there will be tons of problems and many people will be hurt, but it should be a market correction, not a governmental intervention correction.