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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (26361)	12/31/2004 1:16:31 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Who ever makes the secondary market sets the standards. This is the same in the insurance market. In Australia, where there's no Fannie Mae, large banks are the secondary market - including Citibank. They also package mortgages for investors. Because of this I've had weird offers from Citibank Australia where my savings account pays 5.4%. One offer was a CD account which pays 9%. But if mortgage rates rise higher than 7.25% or lower than 4.75%, the CD account pays no interest. Obviously the CD is a derivative in Citibank's hedging program for their secondary mortgage market. Of course mortgage loans cost more in Australia and if you want a fixed rate you have to "buy it". You can buy a fix on your mortgage rate for any term between 3 years and 15 years - the longer the fix the higher the price. If you ask about a 30 year fixed rate lender will just laugh at you. Here in the home of Monetarist Socialism 30 year fixed rates are plentiful and enormously subsidized by the Fed's money creation process - which they call "price stabilization". I think Monetarists are making a huge mistake by not calling income taxes the Annual Work Incentive Program. The actual Fair Issacs FICO score makes a lot of sense, although combining this with "No Down-Payment" loans is an unwarranted leap of faith in my estimation. To get the highest possible FICO score, you should have long-established, large, lines of credit which you have hardly ever used. This combined with a lot of assets is my idea of a good credit risk. Newer credit rating systems, such as Experian (ex-TRW), are based on lunatic assumptions. Experian marks you down for having large unused lines of credit. But they do want you to be indebted to everyone in town. You can raise your Experian score by obtaining a car loan or a leased car, getting a mortgage on your home, and obtaining credit cards from many retail stores. They give high scores to someone who is widely indebted and makes regular payments. Their score values a person who is "well experienced with credit." Now I ask you, isn't such a person just one lay-off notice away from being the worst credit risk possible? .