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You might think, "I am not in the real estate industry, so this won't affect me"---------WRONG! The mortgage sector is the main strength of our country's economy, and we may be heading for a melt-down!

As an insider in both the real estate and mortgage industry, let me offer you this as a consumer advisory:

Back in March I posted a blog about how the subprime mortgage industry lost all of their investors due to the super-high forclosure rate in 2006. Of course they created this mess themselves, by offering mortgages to anyone who can breathe, to make a quick 1 to 2% of the loan amount in a conduit Wall Street trade to the investor. Sheer greed got in the way of banks even caring about the fraud involved to misrepresent the loan to the investor. The most common types of fraud are stretched appraisals, phoney employment, phoney stated income; although there are many other types as well.

For those not aware, the banks may service your mortgages, but 98% of them were funded and owned by rich investors in mostly Korea. These investors stopped investing in our mortgages because the high rate of forclosures, made them take a huge loss. Now most banks can only fund loans out of their own resources, and the designated amount loaned to them by the federal reserve. It seemed as if we would be okay with just the subprime lenders shutting down, but now seeing A-credit lenders shutting their doors, is very shocking!

American Home Loans, is / was a very large wholesale mortgage lender, that I have brokered many A-credit loans through myself. I was surprised to learn that they closed their doors two days ago. Their stock dropped 90% that day.

I was told at my real estate office that last week; right at the closing tables in two separate incidences, Countrywide Bank recalled their loans, and left the homebuyers sitting at the closing table in shock and helpless! They actually wired the mortgage money to the closing attorney, then requested it back!

I am receiving emails daily from large wholesale banks stating their new limitations and stricter guidelines, while defending how much money they have in reserve, so we don't give up on them.

I am not sure why the public isn't being alerted to what is happening, and how it could ramify into a much weaker economy-----hopefully not a crash; but I sold all my personal investments last week just in case. I am in no way recommending to anyone to sell off their investments, that was just my personal choice. I can always reinvest if a solution to this problem somehow comes about. I just don't see one in sight.

Not to create a panic, but I am advising you to do your own research, and stay alert to what is happening in this industry, because it will affect you, no matter who you are.

Jane

Jane's Place

Inside Information---A Consumer Advisory

jmax123

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