About 2 weeks ago I wrote a post entitled "Back end of housing bust..." where I wrote about how it would be rough for consumers when wall street finally lost their appetite for mortgage backed securities. We that happened this past week. Banks can no longer package up some of their exotic mortgages and sell them off, so guess what... they aren't going to offer them any more. Read this story at MarketWatch that talks about some banks cutting WAY back on the products they offer.
It took far to long for this to happen. It will be very interesting to see what the fed does this week, if anything. I for one hope that they don't step in and clean this up for everyone. We need to get the housing market back to fundamentals... the norm needs to be 20% down payments on a 30 year fixed mortgages, not 0% down, interest only ARM. For that to occur there needs to be a lot pain distributed across the market (Hedge Funds, Wall Street Banks, Mortgage Companies, and Consumers).
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