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Subprime Woes Reach New Heights
Author: Dane  | Posted: 23-04-2008 | Comments: 0 | Views: 6 | Rating: (107)  (?) 
As the sub-prime mortgage crisis continues to unfold, new figures emerge from the Mortgage Banker's Association: A record .83. That means that, in three months, one out of one hundred homeowners have been foreclosed on. Because of America's size and diverse population, the statistics are somewhat skewed: In many places like Austin, Texas and New England, growth remains steady and house prices remain strong. However, in placed like Cleveland, Ohio and other pockets throughout the Midwest, foreclosure rates are much higher. One in every three mortgages has defaulted recently in these smaller, white-collar towns due in large part to predatory lending, as well as increasing energy costs.
But the other half of the subprime crisis plays out on Wall Street. As investment banks like big player Bear Stearns fail and the credit crisis remains, markets are pinched for investors in sub-prime securities, which have worked their way into the larger economy through such complex financial instruments as Structured Investment Vehicles, or SIVS. These entities don't consist of money per se, but "commercial paper," and therefore aren't reflected on a balance sheet, making them difficult to track.
As the Federal Reserve continue to slash interest rates, the best rate for prime mortgages remains stubbornly above historical levels, meaning that credit is not available to banks in quantities that can allow cheaper home loans. By hoarding cash, banks are less likely to spook investors or lose needed capital. But by doing so, they exacerbate the problem, leaving central banks responsible for massive injections of liquidity to keep the cogs moving. In addition, the Fed has taken the unprecedented step of offering its "discount window" to investment banks in addition to commercial ones. Such behavior represents a fundamental break in policy for both the central bank and the president. There may be good reason for them getting their hands dirty. The extent of this credit crunch has been recently compared to the Great Depression, painfully reminding America of its most desperate moments.
Faced with the twin serpent of financial market volatility and increasing consumer pressure, it is no wonder investors are reeling. As the economy has cooled, oil prices have maintained record highs, peaking above $110 a barrel. While crude futures have reflected speculation more than lack of supply, recent falls suggest that investors may be recognizing a slow in oil demand. This also reverses the dollar's lurching fall, thus absorbing some lost profits to oil-producing countries, who peg their currency to the dollar. However, this reflects the exception rather than the rule.
In general, this cycle is self-reinforcing until a new equilibrium is reached, which cannot happen until the full extent of sub-prime exposure is known. This factor depends on the number of foreclosures on sub-prime borrowers, a mechanism for resolving both the individual defaults (necessarily a lengthy process) and subsequently assessing the potential devaluation of all its reinvested components. Until then, the economy remains like a proverbial deer in headlights, unable to understand how much risk it has taken on but running out of time.
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my bank advised me to talk to their mutual funds advisor cuz i had 20k sitting in my account. so this past june i went and put 15k in td mutual funds (cdn equity,cdn bond, global select, int'l select, us large cap value fund, dividend growth) on the advisors advise and im already down to 13,995 and this is in just one month!! im 22 years old and cant lose too much money... im going crazy!am i gonna lose everything? sld i just ignore it or should i pull out before its too late?? help!
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I sure hope someone can help me. I'm looking for a book I read two or three years ago, fiction, and I think it was new then. About a Southern, Jewish, Romanian family who lived late in the 19th century, I believe. I borrowed this book and did the unthinkable: I loaned it to someone else. And haven't gotten it back, so I need to replace it. I thought it was Chickens Scratching Corn, but maybe that's just a line in it. I'd appreciate anything. Thank you so much. Marcie Phillips
Mediator delay tactic.
By: Nic | 14-07-2008
Is there a Florida law that limits the amount of time a mediator can delay a foreclosure.
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