Columbia SC Real Estate and Homes for Sale

Okay, here it is Friday afternoon and time to write the “Columbia SC Real Estate Mortgage Market Week in Review.” You know how some newscasts warn you to tell the kids to go in the other room because what comes on next isn’t going to be pretty? Well, there aren’t any pictures but whats happening in the financial world is not pretty right now. If you’re squeamish, you might want to wait to read this until after you’ve eaten. So here goes:

The battle that’s waging right has now settled quite firmly in the “credit crisis” camp. Here’s whats been happening on that front:

Indymac Bank

(who?) They have a good sized branch presence in Southern California but did a lot of mortgage lending on the wholesale side. They announced that they are effectively ending their writing of residential mortgages and buying residential mortgages from brokers (with the exception of retail staff at their branches in California). How does the song go, “Another one bites the dust?”

Lehman -

this time its not a mortgage company, its another investment bank (remember Bear Stearns?). They’ve spent a lot of time this week trying to dispel rumors that they are in trouble and trying to show that they actually have enough capital (aka cash) to make things work. It sounds a lot like what was being said before Bear Stearns almost went under and almost brought the entire financial system down with them.
and now for the big issue of the week:

Fannie and Freddie:

Yep, I put them in bold print and underlined because they are, in my mind, infinitely more important to the housing and mortgage market than what Indymac or Lehman are. So whats up with Fannie and Freddie? Heres an overview:
1. They are experiencing substantial losses. Somewhere in the neighborhood of $11 Billion (thats $11,000,000,000) so far this year.
2. Many analysts are raising questions about whether they have enough capital to keep functioning the way they are.
3. They currently control over $5 Trillion worth of mortgages (that’s $5,000,000,000,000) in the United States.
4. According to a former Fed regional governor, they have lost so much money that they are already insolvent.
5. One analyst said that in order to remain in decent capital positions, Fannie and Freddie need to raise approximately $75,000,000,000.
6. Fannie Mae’s stock has fallen over 50% this week alone and over 90% since August. With those type of stock prices, its going to be very very difficult for them to raise that kind of money.
7. As that scenario has unwound this week, the markets and the rumor mills have really kicked up as people start wondering what sort of government activity would step in to solve the problem.
Its frankly been a very ugly week and there isn’t any resolution in sight yet.

So what does it all mean for Columbia SC Real Estate Mortgages? :

1. If you need a mortgage, get it now. Call me this weekend, call me Monday, do it now because its not going to get any easier to get a mortgage any time soon.
2. If you think you might need a mortgage in the next six months, consider getting it sooner. Have you ever seen the government get involved in anything and have it get cheaper? Seriously, if things do get so bad that Fannie and Freddie get bailed out by the government, then were going to be looking at more expensive credit than we have now. How much? How soon? I don’t know.
3. Whats this going to do to the housing market? I wish I could tell you that I knew, but I dont think its going to be a positive.
I think its safe to say that we are at a point in the credit crisis where we are going to see some seismic shifts in the picture in the financial world and that banking, investments, and mortgage lending are going to look different because of it.

I wish I had better news for you, but I have to say that I can sleep better since Im telling it like it is rather than soft selling it.

Call or e-mail me if you want to discuss Columbia SC Real Estate Mortgages further.

Thanks!

Tom Vanderwell
(616) 292-7559