Banks Have Unlimited Power? The world today is void of financial exuberance to say the least - Banks, pension funds and the like have grown tired and bruised, if not dead, from synthetic CDO's, MBS and anything mortgage related.
So do you think it would be an easy time to get financing for anything? Hell No.
Deals are few and far between and even some of the most credit worthy individuals are being denied personal and business financing.
So what is the next step for us as consumers and potential creditors.
Clearly, unique and structured mortgage products of old, the stated wage earner, Option ARM, subprime for the masses, 80/20 stated purchases, stated commercial mortgages and the like...
good grief looking back, it's easy to see what went wrong.
Government guaranteed mortgage products which encompass 95% of the mortgage market today are all that is left today.
Here is the really crazy thing.
I want to bring the exotic mortgages all back..
..
wait before you call for my head on a platter.
Let's remember that these products at one time served very valuable and dare I say noble needs.
Let's take subprime products.
These products at one time were a very small fragment of a much larger industry - subprime almost missed most production reports.
But this product for the first time provided working capital and first time home financing for many people who would have otherwise never been able to purchase or borrower.
Not because they weren't good loans, but because they just didn't fix the box.
There were a lot of good loans and, well, a lot of bad loans too.
But when these products were first being utilized borrowers were not allowed to fully leverage the value of their asset, in this case their homes.
So even a bad loan did not lose money for the investor..
The person and groups of people most burned by the mortgage meltdown.
You don't see the banks hurting right now do ya? And as was predicted by most industry veterans, wall street become involved and starting securitizing these loans and taking no risk whatsoever.
As soon as this happened the volume of this specialized niche was turned into some bastardized version of the initial intended use for the product...
Throw in some A+ ratings and everyone is a buyer.
Niche products will come back soon with the promise of high yields for investors and "real" equity positions being formed in the real estate sector.
Sure it's not going to be pretty but values are stabilizing and even grown a bit in some places.
You mean to tell me a 50% LTV (today's values) deal on stated income to a dentist is a bad loan today? Until then, financing is going to be like going to the doctors office that covers the naughty places and nether regions.
It will be embarrassing, intrusive, and not gratifying in anyway whatsoever.
Before applying or wasting anytime please consult a financial expert to see if financing is needed or if financing is available for your individual need.
So banks now are purchasing nearly all the mortgage originations out there and as such most residential and commercial products are pretty vanilla.
So know it is more important than ever to have a professional look at all the minor details of qualifying.