The next financial crisis: A collapse of the mortgage system

[Demovictory9]

The next financial crisis: A collapse of the mortgage system
The mortgage finance system could collapse if the Fed doesn’t step in with emergency loans to offset a coming wave of missed payments from borrowers crippled by the coronavirus pandemic.

https://www.politico.com/news/2020/03/27/mortgage-system-collapse-coronavirus-pandemic-152338

The U.S. mortgage finance system could collapse if the Federal Reserve doesn’t step in with emergency loans to offset a coming wave of missed payments from borrowers crippled by the coronavirus pandemic.

Congress did not include relief for the mortgage industry in its $2 trillion rescue package — even as lawmakers required mortgage companies to allow homeowners up to a year's delay in making payments on federally backed loans.

When individuals stop making payments on their home mortgages, the companies that handle the loans and process those payments, so-called mortgage servicers, are still on the hook: They're legally obligated to keep sending money to insurers and investors in mortgage-backed securities, the giant bundles of home loans that are packaged and sold on the securities markets.


Now industry executives and regulators are worried that Congress's generosity toward homeowners could wipe out those companies, causing investors not to get paid and potentially bankrupting the entire mortgage finance system — a domino effect that would make it much harder for borrowers to access credit to buy homes.

[SheltieLover]

1. YUP!

And millions homeless from apatrment evictions!

Auntie Maxine's plan needs to be enacted yesterday!

[Chainfire]

12. The good thing is

is that if we are all homeless, there won't be such a negative stigma attached to it.

[SheltieLover]

13. Thats's one way to look at it

I see more chaos & disempowerment of citizens en masse!

[Amishman]

2. It is a bit different than 08

The recent steady rise in property values has been largely supply shortage driven, rather than a value bubble.

Banks had twofold problems in 08, loans were going bad and property values were plummeting so the collateral (the residence) wasn't worth anywhere near what was borrowed.

I don't see that same massive drop in real estate values, especially on the lower end of the spectrum.

[customerserviceguy]

17. I spent

25 years working in the title insurance business, and saw markets go up and down along with the health of the mortgage industry.

If it is harder to get a loan to buy a home, real estate prices go down. This stock market crash could easily be followed by a real estate crash. We're free and clear, but you will see an awful lot of underwater loans.

[Eliot Rosewater]

3. Gonna be a nightmare. Since Rump fired the pandemic team and reacted to the crisis

in the worst possible way...since Rump made this a crisis unlike any in our history...since Rump continues to force people to be infected...it is gonna be bad.

How about that Kentucky repub fuck who FORCED the democrats into a room together so they could infect each other and die!

How about that fucker

[Turin_C3PO]

10. That Massie guy?

Yeah, he’s an asshole.

[gibraltar72]

4. The dominoes have been lined up for a long time

Way over leveraged in so many sectors. Huge subprime in cars.

[msongs]

5. current situation is created by political decisions, not market forces. quite different than 08 nt

[RoadRunner]

6. Maybe it's time for a debt jubilee

Isn’t that the Christian thing to do?

[msongs]

8. debt jubilee is from the old testament so I suppose that would make it the jewish thing to do nt

[customerserviceguy]

18. True, but

having a jubilee then building a toyland town all around the Christmas tree, well, not so much.

It ain't gonna happen either way.

[Wounded Bear]

7. Don't forget the student loan situation...

that's almost as big.

[Chainfire]

9. Oh Joy!

Things are just looking so rosy. Financial ruin, mass extermination, four more years, I guess there is a crossfire hurricane, a snake bite and a coronary in my immediate future too.

The Fed can just print mo money, hell, in for a penny in for a couple of more trillion. Look at the bright side though, if the lenders can evict tens of thousands of homeowners, and buy their houses up for chump change, with zero interest money, it could make America great again. We all know it is better to rent than own anyway......

I have less than a year to pay on my mortgage, I will make those payments if I have to rob a orphanage for the money. In fact, if inflation kicks in hard enough, I can pay off the mortgage with worthless money. So there is a bright side after all.

[enid602]

16. Sign of the times

“Brother, can you spare a trillion?”

[Hoyt]

11. Definitely going to have to do something. Government has taken steps to help home owners.

Federally backed mortgage payments can be delayed for 12 months. But that’s got to strain the systems big time. One thing good for home owners, short-term at least, mortgage companies can’t possibly handle millions of foreclosures, even if they wanted to.


https://www.bankrate.com/loans/loan-relief-during-coronavirus/

[Wellstone ruled]

14. We will see the repeat of 07-09 by this time next year.

Mortgage lenders will still require all the deferred Interest be paid at the time of mortgage resumption.

[McCamy Taylor]

15. Who here thinks the banks will not rush to foreclose?

Anyone?

[customerserviceguy]

19. From my observations

of real estate markets for over forty years (25 of which was spent in the title insurance business), I don't think foreclosures would go up for what might be viewed by the mortgage industry as a temporary crisis.

Even the last bust cycle showed that lenders were slow at getting people out of their homes. If a bunch of foreclosure properties get dumped on the market all at once, prices are greatly depressed. It makes sense for the lenders to stretch it out, to "flatten the curve" as we say these days.

[smirkymonkey]

20. Can you imagine what this is going to do to the student debt bubble?

I am predicting a major crash. We are talking at least a trillion here. People will be defaulting left and right.

[Sewa]

21. The stress test were to make sure this wouldn't happen

The stress test were to ensure that financial institutions had adequate funds to withstand a downturn in the economy. I’m sure Steve will take care of them, even if they don’t need it.

[roamer65]

22. You all don't understand UNLIMITED QUANTITATIVE EASING.

It means the Federal Reserve will buy ANYTHING and EVERYTHING to ensure liquidity.

The Fed isn’t the lender of last resort anymore, it s now the buyer of last resort.

It will also bring us the largest currency crisis in human history.