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At 7%, Refis Die

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Michael Reilly

Junior Member
Joined
Jan 15, 2002
Sounds to me like their saying, Say good bye to Refi, hello forclosure market.

Mike-NY

GSE-Backed Study: At 7%, Refis Die
If mortgage rates hit 7% the refi market will "evaporate," according to a new study commissioned by the Homeownership Alliance, which is funded in part by Fannie Mae and Freddie Mac. Written by Mark Zandi, chief economist for Economy.com, the study says that if rates rise to 6.5%, about one-third of borrowers will be eligible to refinance. According to figures compiled by National Mortgage News, refis account for about 65% of all loans funded. (The information is contained in NMN's Quarterly Data Report.) The new HA study says about $1.24 trillion in mortgage debt will be refinanced in 2002, compared with $1.2 trillion in 2001. "There is also worry over the potential for heightened credit-risk posed by the increased mortgage debt loads of cash-out borrowers," writes Mr. Zandi. But he says even if rates rise a bit, refis could continue strong in 2003 thanks to the growing popularity of adjustable-rate mortgages -- especially 3-1, 5-1, and 7-1 structures. Based in Washington, and managed by a former top aide to Sen. John McCain, R-Ariz.., the Homeownership Alliance is bankrolled by other housing/mortgage-related groups as well as Fannie and Freddie. It can be found online at http://www.homeownershipalliance.com.
 
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Montana
Mike:
Not to worry. The American homeowner is drunk on home equity. As long as there room to move, compliant appraisers, homeowners will vacumn their equity out of their houses. 7% is not going to stop them.

The next scheme is "lower your monthly payments" Mortgage brokers are going back to all those smart people who took 15 year mortgages, and wave a lower monthly payment in their face by going back to 30, ignoring the higher rate.

I agree foreclosures are going to pile up. It is becoming so easy to walk away. They walk away, keep their credit cards, keep their car payment and just start over. They don't even have to buy a range, refrigerator or a garage door opener, they took it with them when they left their last house.
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
Doug, Here they also take the Hot Water tank all copper plumbing & AC Unit.

There are two kimds of people those U can Count On & Those that Don't Count.
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Mike

if ya watch the overall market in your area, your better off and it's more applicable;

for instance, in my area, if the rates rise 1/4% we will loose approx. 20% of the market share; if it rise's 1/2% tac on another 20-30% of market share loss; and this is based on past experience; all we do is move into a different area of the market. When real estate starts to build up (on market increase) ya know the markets slowing and only the middle class & up will be doing anything. It blows out the bottom of the market in total, the gobmnt. knows exactly what their doing. We are just the puppets, the strings are pulled by someone else. Read a book; of Pawns & Kings - was put out about 15+ years ago :wink:

8)
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Refi's from fixed to ARMs, additional equity products, REOs. All will still be here. The question will be the market in which you work. In my area, there is so much new growth and influx of population that there will be work. In lower populated areas or areas of declining population, there will be a decline in work. The business is cyclical. Always has been.

Roger
 
B

Bemis Pownall

Guest
PEOPLE ALWAYS NEED MONEY

just less will @7%
and the number hitters will be relied on to make deals work once the market tightens up(more).

Happy New Year!
:bday:
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Just think of the hundreds of thousands of loan officers who will face foreclosure when "the market turns". Hmmmm, sounds like a soap opera in the making!
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
8) Not to worry.

In 1972 when I first got into real estate, the state fixed rate was 7%. By law, anything above that was "usury". By 1973 that law was revoked. My Sales Manager said that if the rates went above 7%, and property values in one of our largest subdivisions went above $20,000. he was going to get out of the business. In 1979-1982 time frame, thanks to Jimma Carter, interest rates were at 17% up to 21% in some areas. The former sales manager was still in business, and the average sales price in the large subdivision was $72,000. (It is now $95,000.).

In 1977-1979 lenders told us the long term, fixed rate mortgage was dead, never to be seen again. Fast forward to 2002 and the most popular rate is........... :?: You guessed it. The long term fixed rate mortgage now below 6% on a national average. :wink:

So..............what does the future hold :?:

Certainly will have higher loan rates, many, many foreclosures with some lenders and appraisers going to jail, some will lose their license, some will not.

Will appraisers go the way of horse and carriage? I doubt it. It just might be that if things are really bad, the public will need a good thorough inspection of properties(similar, I might add, to the FHA requirements), and a good reliable market based opinion of value from an honest appraiser.

Happy New Year, and may all your days ahead be safe, healthy, and prosperous.

Don Clark

The eternal optomist
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
An optomist is just a pessimist who didn't have things work out! Happy New Year everyone.
 
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