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Subprime Lenders Starting to Explode

During the housing boom, many banks devised “creative” loans allowing people to borrow money with no down payment and pay low interest rates for the first few years on adjustable mortgages. Now, as interest rates reset higher, more borrowers are missing payments stressing the lender’s books.  Remember this article from a month ago – Subprime Lenders Gone Too Far: A Time Bomb Waiting to Explode.  Today the stock price of one subprime lender exploded.  The others were wounded.  Here is the damage:

  • New Century Financial   -36.21%
  • Accredited Home Lenders -6.03%
  • Country Wide Financial -2.57%
  • HSBC Holdings -1.50%

HSBC, one of the world’s largest banks, started today’s party by announcing its bad debt charge would be about $1.8 billion higher than expected.  In total, its 2006 charge for bad debts would be about $10.6 billion — or 20 percent above analyst consensus forecasts.  It attributed the losses to problems in its mortgage lending to lower quality U.S. borrowers. 

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Housing Market Stabilizing – NOT! Part II

Housing Market. On December 5th, I issued a what’s he smoking report rasta.gifas Robert Toll, CEO of Homebuilding Company – Toll Brothers, stated “Fifteen months into the current slowdown, we may be seeing a floor in some markets where deposits and traffic, although erratic from week to week, seem to be dancing on the bottom or slightly above.”  His out is that he said “some markets.”

Two months later, on February 8th, Toll said it expects first-quarter write downs could total $60 million to $160 million or more, as markets such as Detroit, Minneapolis, Chicago, Reno, Nev., and parts of Florida “may not yet have stabilized.” Toll said full-year write downs would “significantly exceed the estimates in the guidance we provided in December 2006.” Clearly those weren’t the bottoming markets he was talking about in December.

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Make Money in Real Estate in 2007: 5 Insider Secrets Investors Need to Know

Below are excerpts from “Make Money in Real Estate in 2007.” 

Source: PR Web
by Stephen Gregg

  1. Get good quality real estate investing education
    Having the knowledge is the key. But buyer beware: There are various types of so-called real estate investing seminars available.
  2. Know your market
    Are you in a market with high or low appreciation; what is the renter status in the area; are there a lot or not very many foreclosures; are you in a high, medium or low income area. Is it a growing population area, or decreasing?
  3. Decide your investment strategy
    “Buy and Hold,” “Fix and Flip,” “Creative Financing,” “Foreclosures,” “IRA and Retirement Plan Investing,” “Lease Options,” “Multi-family dwelling,” “Commercial real estate,” and many others.
  4. Don’t listen to the news
    If you base your investment strategies on news reports, you may not get out of bed.
  5. Build your TEAM
    Players on your team may include other successful investors, a mortgage company, an accounting firm and tax attorneys to protect your assets, a mentor who is willing to walk with you every step of the way, and a group of professionals who will identify potential investment properties. Your income will be the average of your five best friends. Be sure to choose your team wisely.
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Knowledge Always Precedes the Money

I was just reading an article and the author stated that his motto was “knowledge always precedes the money.”  I really like that.  We often hear people say, incorrectly I might add, that “knowledge is power.”  I prefer “acting on knowledge is power.”  However, knowledge always precedes the money has a nice ring to it.  I may adopt it as the theme for the site.

The title of the article is “If Real Estate Investment Is So Great, Why Doesn’t Everyone Do It?“  The author’s premise is that fear of taking action is one of most people’s greatest inhibitors.  He calls it “It is easier not to …”  This applies not only to Real Estate investing, but the other paths to financial freedom as well.

To alleviate this fear he suggests a one word answer KNOWLEDGE.  Properly armed with knowledge most can overcome their fears to the point of taking action.

This helps to affirm what I am trying to do here.  I will continue sharing with you knowledge that I have acquired on the different paths to financial freedom and hopefully it will lead a few to act.

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Subprime Lenders Gone Too Far – A Time Bomb Waiting to Explode

Remember when a 20% down payment was expected when purchasing a house.  Sometimes with stellar credit and maybe a special situation, like a first-time home buyer, you could get in with a 10% down payment.  I recall a few weeks after my wife and I purchased our first home – both cars broke down.  Saving for your first home is one of the few times, from a financial perspective, that both husband and wife are clearly on the same page.  Everything takes a back seat to saving for that down payment – shoe shopping, night out with the boys, everything.  That’s exactly why both of our cars broke down.  We had neglected maintaining the cars and everything else while saving for our down payment. 

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