Why Private Investors Are Staying Away From MortgagesTopic: Mortgage
As homebuilders gain confidence and real estate agents claim demand is back, one would think investors would jump right back in for fear of missing the bottom. Investors in housing are buying up as many distressed properties as they can find, but investors in the mortgage market are still sidelined, burned by the subprime bust that left many of them with huge losses.
The private investor share of the outstanding mortgage market fell below $1 trillion in July to $999.7 billion, according to Amherst Securities. This is down from $1.8 trillion a year ago and $2.3 trillion at the peak in 2007.
???Since this is somewhat of a psychological barrier we are crossing, we naturally asked the question how long it might take to cross other benchmark market sizes,??? wrote Amherst???s Laurie Goodman in a monthly report. ???In the absence of any new issuance, we estimate the market will broach $750 billion in June 2014 and $500 billion by February 2017.???
The private investor share of the market has been dropping precipitously since the crash of the mortgage market, as millions of borrowers defaulted on loans, but even as the market now recovers there has been little to no new issuance.
Fannie Mae, Freddie Mac, and the Federal Housing Administration back more than 90 percent of all new loans, whereas they were barely one third of the market during the housing boom. Only Redwood Trust [RWT Loading... () ], which doesn???t originate loans but issues securities on pools of largely jumbo loans, is in the game and growing.
Redwood, a real estate investment trust (REIT), which has returned 33.4 percent this year, is now looking to get into the agency mortgage market as well, in talks with Fannie and Freddie to, ???add conforming loans to our product menu,??? according to a letter to shareholders. Redwood is also doing another jumbo security issuance in the third quarter.
Other players are reluctant to jump back in, despite the government officials??? claims that they are trying to shrink Fannie and Freddie by, among other things, raising guarantee fees. The FHA recently raised insurance fees and premiums, also claiming that it wanted to shrink its share of the market. Private investors still say government subsidies are pricing them out.
???It's a combination of they've been burned by the subprime meltdown and don't trust the quality and ratings, but equally important, yields are so low because mortgage interest rates are so low,??? says Guy Cecala of Inside Mortgage Finance. ???The only way to really revitalize the private label market is to take the government loan limits down to $417,000 again.???
Loan limits at Fannie, Freddie and the FHA were raised to just more than $729,000 in many major housing markets and then Fannie and Freddie???s were later lowered to $625,500. Meanwhile the Federal Reserve (explain this) is following an ongoing policy of exceptionally low interest rates, designed to keep long term interest rates in particular low. Mortgage rates for conforming loans have been sitting well below 4 percent, and even jumbos are near record lows.
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You should have went to the right pronfssioeals and you would not be in this situation. Not only the ownership rights of the house should have been transferred but also the financial obligation against it. Unfortunately, you're still responsible and the loan company should be attempting to contacting you when payments are behind.Because this was not done correctly in the first place I have to wonder if you still have ownership in the property. Was this transaction done at a title company and did you file a Quit Claim Deed on the property? If not, you still have have joint ownership in the property. What that means is that if the house was ever sold then the proceeds must go to you too. He would not be able to account for the transaction between the two of you because it was not done correctly. Take that as you will
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