Comments on: Kedrosky on the Loan Default Myth http://www.behindthemortgage.com/2008/01/kedrosky-on-the-loan-default-myth.html?utm_source=rss&utm_medium=rss&utm_campaign=kedrosky-on-the-loan-default-myth Alex Stenback | Twin Cities Blog on Mortgages, Rates, and Real Estate Thu, 05 Jan 2012 22:38:40 +0000 hourly 1 http://wordpress.org/?v= By: Editor/Alex http://www.behindthemortgage.com/2008/01/kedrosky-on-the-loan-default-myth.html/comment-page-1#comment-761 Editor/Alex Tue, 29 Jan 2008 23:50:47 +0000 http://dev.multiplycommunications.com/btm/?p=663#comment-761 You know, I had a paragraph in that original post about the likely consequences - higher rates, down payments, etc. - but cut it becuase I was running short on time. I've linked up the final para of CR's post on that topic - another awesome post by CR/Tanta. I happen to think that the lenders properly re-pricing risk in this way will contribute to the long term health of the housing market in the sense that it will keep things from getting too overheated and speculative again for a long time. In the short term, it will add to the downward pressure on prices, depending on how bad the jingle mail problem gets, and how quickly lenders adjust for this added risk factor. You know, I had a paragraph in that original post about the likely consequences – higher rates, down payments, etc. – but cut it becuase I was running short on time.

I’ve linked up the final para of CR’s post on that topic – another awesome post by CR/Tanta.

I happen to think that the lenders properly re-pricing risk in this way will contribute to the long term health of the housing market in the sense that it will keep things from getting too overheated and speculative again for a long time.

In the short term, it will add to the downward pressure on prices, depending on how bad the jingle mail problem gets, and how quickly lenders adjust for this added risk factor.

]]> By: Nate http://www.behindthemortgage.com/2008/01/kedrosky-on-the-loan-default-myth.html/comment-page-1#comment-760 Nate Tue, 29 Jan 2008 23:39:59 +0000 http://dev.multiplycommunications.com/btm/?p=663#comment-760 Also, in case anyone thinks this isn't gaining in popularity, check out this link. http://www.youwalkaway.com/ Also, in case anyone thinks this isn’t gaining in popularity, check out this link.

http://www.youwalkaway.com/

]]> By: Nate http://www.behindthemortgage.com/2008/01/kedrosky-on-the-loan-default-myth.html/comment-page-1#comment-759 Nate Tue, 29 Jan 2008 23:24:08 +0000 http://dev.multiplycommunications.com/btm/?p=663#comment-759 Calculated Risk did a long write up today on the options theory and mortgage pricing. Does a good job explaining how lenders are going to be forced to price this into their mortgage models. As it seems the current models have been based on the assumption that people traditionally tend to default more during periods of high interest rates. Since we are now enjoying a market with very low interest rates, but very high (and increasing) levels of defaults, they make the arguement banks will need to adjust. Seems to imply higher lending costs will be a required change in the industry. But if lending costs get more expensive, either through rate increases or other fees, it has to have a negative effect on housing prices. Additional pressure on housing prices would push more people into negative equity on their homes, which would lead to more intentional loan defaults. How can banks work their way out of this if prices continue to decline? Calculated Risk did a long write up today on the options theory and mortgage pricing. Does a good job explaining how lenders are going to be forced to price this into their mortgage models. As it seems the current models have been based on the assumption that people traditionally tend to default more during periods of high interest rates.

Since we are now enjoying a market with very low interest rates, but very high (and increasing) levels of defaults, they make the arguement banks will need to adjust. Seems to imply higher lending costs will be a required change in the industry.

But if lending costs get more expensive, either through rate increases or other fees, it has to have a negative effect on housing prices. Additional pressure on housing prices would push more people into negative equity on their homes, which would lead to more intentional loan defaults.

How can banks work their way out of this if prices continue to decline?

]]> By: Miranda http://www.behindthemortgage.com/2008/01/kedrosky-on-the-loan-default-myth.html/comment-page-1#comment-758 Miranda Tue, 29 Jan 2008 19:12:26 +0000 http://dev.multiplycommunications.com/btm/?p=663#comment-758 I like the idea of being able to renegotiate mortgage loan terms. Especially in extenuating circumstances. And I'm not just talking about loan refinance. Being able to go to a mortgage lender, like you can do with a credit card, and say "Look, I've done a good job here, I deserve a lower rate" would be a good thing. And being able to renegotiate mortgage loan terms for those with economic problems would allow them to keep their homes, and the mortgage lenders would still get their money. I like the idea of being able to renegotiate mortgage loan terms. Especially in extenuating circumstances. And I’m not just talking about loan refinance. Being able to go to a mortgage lender, like you can do with a credit card, and say “Look, I’ve done a good job here, I deserve a lower rate” would be a good thing.

And being able to renegotiate mortgage loan terms for those with economic problems would allow them to keep their homes, and the mortgage lenders would still get their money.

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