Fairfax VA – Before the housing market crash, the subprime mortgage market was hot. Wall Street Firms were eager to get in on the action because they could buy a subprime loan and sell it for a profit.
Based on my analysis, they could mark up the price of the mortgages they bought for five or ten percent. That means that on a $400,000 loan, these firms could make a profit of $20,000 with a five percent mark up. Do that on thousands of loans and you’re talking a serious profit margin for these Wall Street firms.
With all of these Wall Street Firms doing this, they created a boom in the market. Lenders knew that any subprime mortgage they issued would be sold quickly and easily. I’m guessing that the Wall Street Firms were beating on their door trying to buy as many of
Most of the loans were probably sold by the Wall Street Firms. They securitized the bundles of loans, got Moody’s or another rating agency to stamp them AAA, and then sold them to pension funds or on the open market. Pensions, Hedge Funds, and other investment entities liked these investments because of the high interest rate earned and perceived lower risk.
With these sorts or practices, these Wall Street Firms and lenders were playing the game of “Hot Potato.” Everyone was making a lot of money with little to no risk because they just kept passing on all the risk to Pensions and Hedge Funds.
But once the housing market stumbled, the pension funds stopped buying, leaving the Wall Street Firms and lenders with the Hot Potato in their hands. This is what caused the housing market to dry up.
After a while, Wall Street Firms, large national banks and the small lenders giving the loans began to run out of funding. This led many of them to bankruptcy. Given the level of greed that these companies displayed, I wouldn’t feel bad walking away from you mortgage and not wanting to repay the lender for their loss.
We didn’t cause the housing boom and we sure didn’t cause the bust. That was all created by the gamble that those lenders and Wall Street Firms made.
They knew the risks involved. If everything had gone right, then they would have more than likely profited from their gamble. And who would have been paying them their profits? We would have! But for the Average American like you and I, we wouldn’t be able to gamble for a living like they did.
Do you want to know how to complete a Fairfax short sale and never pay the bank another penny? I can help you do that. Call me at (703) 322-0600 for a free consultation. When you call, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can e-mail me at Thierry@ThierryRoche.com
Thinking about a loan modification? Our Fairfax Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender.
Thanks for reading this,
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 County Short Sale Realtor. Fairfax VA Short Sales. Fairfax Realtor.
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