It was simple to get a mortgage loan when the Fairfax VA real estate marketplace was hot. There are quite a few ideas for why that happened. Here is a fact most individuals don’t realize. All the regular rules for risk had gone out the window. Your loan company could give you a risky mortgage loan, but have substantially less risk on their side. Here is how they did it.
The creditors shifted all of the risk to a third party. For example, about 50 percent of all loans are owned by Fannie Mae & Freddie Mac. In case you didn’t know, Fannie & Freddie are now practically a part of the national government. The US Treasury has had to bail them out for about $400 Billion plus. That figure is still increasing.
Yes, Fannie & Freddie had stricter rules for what kinds of mortgage loans they would accept. But, if the bank sold a house loan to home buyers, than that lender’s risk disappeared. Some people suggest that this gave financial institutions a reason to accept loans that should not have been approved.
There’s another way that creditors could reduce their risk. Lenders could sell the mortgage loans to Wall Street. How do you think stock brokerage businesses like Merrill Lynch lost so much money it almost bankrupted them? It was not because their stock trading firm fell apart.
Here is what hurt Merrill Lynch, Bear Stearns, Goldman Sachs, and other Wall Street Companies. They bought thousands of risky home loans from lenders like Countrywide, New Century Financial, and Option One. Most likely, they paid much more than the true value of the mortgage.
After all, how could the primary lender make any profit? They had to come up with the money for the original mortgage. When the housing industry started to falter, the Wall Street Firms took a bath. They were stuck with a lot of loans that were worth less than what they had paid for them.
That is how the loan company who gave a home buyer a risky mortgage loan could throw out most of the risk. Sell the mortgage to Fannie or Freddie. Let the citizens lose funds on their mistake. Or, sell it to Wall Street and allow them to take the hit.
This is the reason many Fairfax VA short sale sellers are not ashamed that they want to short sale without owing the bank any money. After all, it is practically impossible to know who is actually losing the money. Besides, the banks knew the risks when they gave out the risky loans
Are you interested in selling your property as a Fairfax short sale? Call me at (703) 322-0600 for a free consultation. When you contact me, I will describe how the process works in depth and answer any questions you may have. Find out how other sellers with Fairfax VA homes for sale effectively completed a short sale and ask for a free consultation.
Thinking about a loan modification? Our Fairfax loan modification kit has the instructions you will need to get a loan modification approved with your creditor.
Thanks for reading this, Thierry Roche
Thierry is a Real Estate Agent at RE/MAX Premier, and Host of Talk Radio’s, ‘Inside Real Estate’
Phone: (703) 322-0600.
Thierry Roche specializes in loan modifications and short sales in Fairfax Virginia. Fairfax Loan Modification Help. Fairfax Short Sales. Fairfax Short Sale Realtor. Fairfax CountyShort Sale Realtor. Fairfax VA Short Sales.
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