Whats The Worry About Bad Mortgages

Whats The Worry About Bad Mortgages



Why is​ the​ Stock Market So Worried About Some Bad Mortgages
Beginning in​ the​ Spring of​ 2018 the​ stock market reporters discussed some problems in​ sub-prime loans and predatory lending practices by some mortgage companies .​
At first the​ stories were merely in​ passing,​ but as​ the​ months rolled by the​ story became front page news .​
The President of​ the​ United States,​ China's financial network and the​ Chairman of​ the​ Federal Reserve have weighed in​ on​ what is​ supposed to​ be a​ small percentage of​ no credit borrowers reneging on​ their mortgage .​
So why is​ everyone so worried about some lousy mortgages?
The simple answer is​ that the​ old fashion mortgage with your friendly Mr .​
Cribbs at​ the​ bank downtown is​ on​ the​ endangered species list .​
the​ mortgage market today spans the​ globe .​
Within days,​ weeks and months of​ a​ mortgage closing it​ is​ sold all over the​ world in​ bundles of​ commercial paper.
This complex network of​ holders of​ the​ note are bought and sold by financial brokers,​ and a​ others who make these commercial papers part of​ their portfolio .​
the​ problem occurs when trying to​ determine who bought the​ risky,​ defaulting loans .​
Some of​ the​ loans are in​ the​ process of​ foreclosure,​ some are at​ risk for foreclosure and still others are foreclosed .​
The real problem here is​ assessing risk to​ unknown factors .​
Banks,​ lending institutions and mortgage companies do not like speculation on​ risk.
The most significant effect all of​ these risks have effected the​ Stock Market is​ the​ tightening of​ the​ credit market .​
Some banks and mortgage companies have simply stopped making loans .​
Others,​ have made refinancing and new loans with increased restrictions .​
the​ credit market is​ squeezed and that effects big stock market players like banks and financial institutions like Bear Sterns .​
It also effects consumers who are seeking refinancing and new mortgages .​
Within the​ period of​ several weeks in​ late August,​ 2018 the​ Federal Reserve dumped billions of​ dollars into the​ prime lending market making it​ easier for banks and lending institutions to​ make loans and to​ back their existing position .​
in​ addition,​ the​ Federal Reserve dropped the​ interest rate for prime loans to​ major financial institutions .​
the​ next meeting of​ the​ Federal Reserve could see even further drops in​ prime rate interest rates .​
With equal vigor to​ jump on​ the​ band wagon,​ the​ President of​ the​ United States provided the​ possibility of​ legislative help for those unsuspecting mortgage holders who were snickered into making bad loans with adjustable rate loans that were predatory in​ nature .​
the​ problem is​ how can United States legislate bad loans and notes that may no longer be in​ the​ United States .​
Remember,​ Mr .​
Cribbs is​ nearly extinct .​
At the​ present time it​ appears that there are some bad mortgages out there .​
Some are held by people with limited income and little credit .​
Some are held by speculators and house flippers that got caught in​ the​ head lights of​ a​ slowing real estate market .​
For the​ latter mortgage holder it​ does not appear there is​ too much sympathy for their financial crisis .​
the​ common thread is​ that no one seems to​ know how many bad mortgages are on​ the​ loose .​
The stock market hates uncertainty,​ so that is​ the​ reason for all the​ worry .​

The stock market is​ like my dear old Aunt Nell .​
She never married and never had a​ light bulb in​ her apartment house that was in​ excess of​ 40 watts .​
Her tenants virtually lived in​ the​ dark .​
If the​ price of​ milk went up two cents she switched to​ powdered milk .​
If her taxes went up a​ dollar she felt she was on​ the​ verge of​ being destitute .​
Summer visits with Aunt Nell were a​ real hoot .​
In a​ nutshell that is​ what is​ going on​ with all the​ sky is​ falling on​ Wall Street .​
Uncertainty moves the​ market and what is​ causing on​ all flutter in​ the​ financial stocks.
To assuage all the​ Chicken Littles an​ the​ possibility of​ some real problems both the​ President of​ the​ United States and Chairman Bernanke sang a​ tune of,​ you​ can't always get what you,​ but if​ you​ wait sometimes,​ you​ get what you​ need .​
No big rescues for speculators,​ but the​ promise for a​ few bones if​ the​ economy goes sour .​




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