Stockman Scott's Political Debate Porch Message Board

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Politics : Stockman Scott's Political Debate Porch

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To: stockman_scott who wrote (2524)	7/18/2002 5:40:22 PM
From: Jim Willie CB	Read Replies (7) of 89467

note on mortgage industry for real estate (propping bubbles) just talked to a friend who had dinner last night with a fellow who works in the home mortgage business he said the Real Estate bubble is being actively propped the guy works in the Eastern Pennsylvania area he just sealed a $500k jumbo mortgage at 100% financing !!! they wrote an 80% mortgage first, to sidestep PMI insurance then they wrote a 20% second mortgage to complete the deal he said this has become very common he laughed as he reported the chicanery and laxity my guess is the 80% loans get packaged and sold to FannyMae this is a clear signal of bubble in fact, it is a SCREAMING SIGNAL of bubble when RE goes, so goes the economy and with it goes FannyMae and FreddyMac a minimal effort therefore might conclude that the underwritten real estate is overpriced by 0-20% how does one respond to this when a casual economic observer says "but everyone needs a place to live" so shallow, so dangerous, but part of the asset bubble landscape / jim

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