Wed, 2 January 2008
January 2, 2008
I feel most of us have read every report, listened to the news about real estate, foreclosures, sub prime lending until we are blue in the face. I have…and besides news I was looking for voices of reason. I was searching for something more than an opinion. A shred or more of thoughtful discussion…people who had researched and parsed every avenue much as I have been doing.
And in the capital markets, where many of the mortgages were packaged and sold as investments, "I think the rating agencies did a very poor job in rating those mortgage-backed securities," Thompson said.
Mr. Thompson very simply and quite candidly parsed the process.Thank you.
I think the odds are reasonable that it will.
Here's why: Even through the grimmest headlines of 2007, there were a number of positive underlying economic forces propping up real estate and keeping it from a true bust. If those forces continue, they should help cut the time needed for the correction cycle to bottom out and the historically inevitable recovery cycle to begin.
Take mortgage rates. Had the cost of money been significantly higher in 2006 and 2007, does anyone doubt that the delinquencies and foreclosures stemming from the toxic vintages of subprime loans would have been much worse?
But the 30-year fixed rates that hovered in the low 6 percent range for much of the year -- even in the high 5s for a couple of weeks -- allowed many borrowers to refinance into alternatives such as FHA or conventional Fannie Mae/Freddie Mac loans.
The recently announced national loan modification and rate-freeze effort should keep at least some -- no one knows how many -- struggling subprime homeowners out of foreclosure.
Steady, moderate national growth of new jobs, economic expansion and low inflation also helped the national housing market in 2007 and could do the same in 2008.
And as tough as it may seem, I believe good will come of the correction.
Let’s go enjoy the day!