More From Eric Dixon at http://www.NYBusinessCounsel.com

Support Independent Investigations With Bitcoin:
Send Bitcoin Here: 171GMeYRD7CaY6tkXs8dSTjLbAtFazxhVL

Top 50 Twitter Rank of Worldwide Startup Advisors For Much of 2014
. Go to my professional site for solutions to your legal, business and strategic problems. The only lawyer who is a co-inventor of multiple, allowed-for-grant patents on blockchain technology!!! Blockchain and Digital Currency Protocol Development --
Top Strategic Judgment -- When You Need A Fixer -- Explore Information Protection and Cryptographic Security -- MUST-WIN: JUST DON'T LOSE -- SURVIVE!: Under Investigation? Being Sued? Handling Extreme Stress -- Corporate Issues -- Startup Issues -- Investor Issues -- Contracts To Meet Your Needs -- Opposition Research -- Intellectual Property, Media and Reputation Issues -- Independent, top-notch legal, strategic and personal advice -- Extensive ghostwriting, speechwriting, book writing, issue research, press and crisis management services. Listed by American Bar Association's Law Bloggers (Blawgers). Contact EDixon@NYBusinessCounsel.com. European Union audiences: This site uses a third party site administrator which may use cookies but this site is intended for AMERICAN clients and prospective clients only!

Thursday, January 6, 2011

Housing To Fall Further: Here's Another Reason

Residential real estate values could drop even further in 2011 and beyond, depending on the outcome of an upcoming ruling in a Massachusetts court case on mortgage transfer requirements.

This ruling could make it harder for future mortgages to be packaged for securitization purposes.  This can trigger a negative "domino effect" in which mortgage underwriters (the banks which grant the mortgage) find it harder to sell off their underwritten (or granted) mortgages, and then have to hold on their books more of their issued mortgages as "mortgages held for investment."  

I would expect the ultimate effects to be an increased reluctance to issue mortgages based on the banks' perception of having higher risk, the risk being merely the risk of being unable to sell the mortgages off and thus having to retain the mortgages (and the underlying risk of not getting paid on them).  As banks get more risk-averse, they almost certainly will raise mortgage interest rates and other fees.  That means that borrowing costs for homebuyers will increase, and their purchasing power -- i.e., the amount of house they can buy -- will decrease.

The effect on home prices?  Down.

The effect on mortgage rates?  Up.

Say goodbye to those four-percent mortgage rates. 

(I mean, I don't gamble, but bet on these things happening)

Eric Dixon is a New York lawyer who helps people with legal and business problems through Eric Dixon LLC.  Mr. Dixon is available for comment or consultation at 917-696-2442 and via e-mail at edixon@NYBusinessCounsel.com. 


No comments:

Post a Comment