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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (27593)	8/3/2007 7:32:50 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78819

The scary outlook I envision is two-fold. First, a lot of the mortgage-originators/packagers/sellers are now gone and lending standards are getting tougher. And so it's obviously tougher for people to get a new loan if they are trying to buy a house. That's not good, but what could be worse, is all the people already in houses who have to re-finance. How will these people do this if the the mortgage-originators/packagers/sellers who got them in, are themselves now gone? There will be others who can and who will step in, I'm sure. I'm speculating though they'll say something like: "Okay, we'll refi you, but you have to qualify by our standards -- you will need to prove your income and your fico score at a certain level. And oh, by the way, we'll refi you -- at current rate of course - which as you know is higher than the rate you are now paying---, but we'll refi only for 80% of appraised value of your home. And we want a current appraisal of its value. So if your appraised value has dropped to $300k and your note is $290K, we'll grant you a mortgage for 80% of $300K which is $240K, and of course you will have to come up somehow with $50K to pay the difference (between the $290K payoff due now and the $240K). In the first case, somebody is living somewhere but they can't move to buy a house because they can't get financing. In the latter case, somebody is or could be in big trouble if they can't quality and/or can't come up with a bunch of money pretty quickly. In either case the housing market sector - the homebuilders, banks, Home Depot's, etc. suffer. As do we stockholders in such companies.