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Well everyone is waiting for the housing market to pick up but what about what about the mortgage companies that industry hit hard when the market turns around.
Question is will the mortgage company said the money to land.
And will be even harder to get a loan -- more expensive joining me now executive vice president with Carrington mortgage holdings Rick shark yeah.
For years we talk to you about the real estate business but but now I mean you're still -- realistic but you're you're specifically.
In the mortgage industry.
Is the mortgage the mortgage industry.
Has been decimated -- so when people the rendered gone and probably -- number of cases rightfully so what's what the future for just the mortgage business along.
Well leaders to prevailing trends right now one is that the major banks are all -- the mortgage business and they're doing it not just at the origination side.
But also in the secondary market received Bank of America pull back and -- you pull back and -- go out of business.
So so they're they're moving out and non bank lenders are sort of filling that void.
Did that requires private capital to come back into the market and and that that becomes sort of a -- -- -- part to the second trend which is.
Most -- right now is underwritten by the government over 90% rate of loans that they -- -- ten million Australian dollar if you're not if you don't qualify specifically for one of those agency loans.
You'll get a loan today and I think those non bank lenders soon will start creating products that will serve that that community of borrowers that can't get -- -- Fine so here comes another -- to non bank lenders -- the way of saying investors out there whether there mutual funds pension funds individuals have put the money into these things.
But but because of the fact a lot of people got their fingers burned investing in mortgages.
Are they going to be because.
Be perceived as more risk going to be charging more for mortgages down the road.
Yes and no I I think what we're gonna see is a return to good old -- fundamentals when it comes to lending.
So if your credit impaired borrower.
You're gonna pay a premium over prime rates today which -- at historically low levels anyhow but you're not gonna pay huge premium if you can put a down payment down if you can provide full documentation if you have track record of work.
So it's it's that kind of bar -- who who has no where to go in today's market who represents a very good risk.
And and if you're an organization that knows how to manage that risk.
You should be able to create something that that works for investors who's gonna step up is -- hedge funds pension funds.
All the above it will be all the above retirement funds -- insurance companies it's -- -- be people like that that will invest in those loans.
But it's gonna be it's gonna take originators to create the specific set of products.
And it's companies like Carrington that are gonna create these kind of products that come out and and are attractive investment vehicles for these institute.
-- our -- so how many people lost their homes in foreclosure over the last few years years to millions of say it's between five and six million census cycles are so.
Lots of reasons some of them were they had no skin in the game -- they just walked away.
Other people that lost their jobs but they now may be -- finding a job -- they have some kind of job.
What about the the not the walk aways but what about all those millions of people out there that do wanna buy a home again and may be something in modest expensive.
They're shut out of the market how we gonna get those people to be homeowners again well those are exactly the kind of people were talking about servicing with these new product these loan products these are people who -- you can't get -- -- you don't really feel that you have a foreclosure on your track record don't even bother asking well historically it's been five to seven years that that you've been out of the market after get a foreclosure bankruptcy something serious like that.
And frankly for people would have lost -- home to foreclosure it's going to take a -- and we're going to see and continuing decrease in homeownership rates we're gonna see -- huge wave of of more rebel activity right now rental occupancy.
Over 96% in their country sure and and people are extensive research shows that people still prefer to live indoors.
So so we're going to see more and more these people rated single family homes that that's why you're seeing a lot of that that activity take place forgive me is fuel investment -- me that I look and I go but here is a group.
That -- is that is perfect to market something to to market loans to make it charge of more.
You you can do that there's there's going to -- it's a continuum -- it's not an either or so there are some people.
Who whose credit was so badly damaged and whose other financial fundamentals don't make sense they're simply not going to be able to line while bond appears on the other -- -- the continuing their people who ever have everything else in place.
Except they have that blemish on their track record.
And you will over the next couple of years it's gonna take awhile start to see products come that that have more forgiveness that have more latitude.
Again -- come for the right price for price forgiveness forever and it's going to be either in the cure in terms of -- higher down payment.
Or it's going to be in terms of higher interest rate or maybe a combination of the two -- -- higher down payment I mean nobody debates the bar where nobody thought that home prices in some parts -- this country go down 5060%.
-- or they what is best for that as a down payment right so are they going to ask for more than 40% in the future or -- say that we are the banks and the lenders are now getting to the point where they think we're not going to see a big drop from here.
There there are almost no projections that that look at home prices falling off another -- now if if all of the distressed inventory hit the market at once that that could that could.
Theoretically start another problem but but that that's not going to happen but we but foreclosures are way up -- is that just simply because they -- finished settling with the government.
Yeah I did the the foreclosure starts are up but there's still actually offer -- a year ago.
And their way down from the peak here two years ago so I think currency foreclosure activity percolate up a little bit and hit a plateau.
Probably -- at save four to five times what a healthy market would look like.
But but well -- we're we're we're back in 2010 and will continue high levels through about two years -- -- worked year old those distressed properties but here's a lot -- short sales.
You see a lot of loan modifications because the attorney general settlement.
And a lot of those property simply won't wind up going all the way through foreclosure process if we're gonna see these foreclosures ramping up and you said a lot more short sales and that means that home prices are not going to.
Start growing anytime soon know there won't I think we're gonna bottom out this year in terms of home prices.
But it's going to be an L shape recovery until we get through this whole overhang of distressed properties.
It's going to be an old little bumps along a lot of along the bottom of that -- Ha I don't personally see home prices started to come back and a sustainable way until sometime in mid to late 2014.
That's not too far no not -- -- and in the recovery will be very brutalized you're gonna see certain markets come back faster than others thought to be tied in local economies and and employment numbers.
We chart of always good information thank you that you see you.
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