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Private Mortgage Funeral? Long Thread
Week ago I called for the death of private mortgages
And yet we still see offers for private mortgages?
Dead Lender Walking?
Let& #39;s break it down
There are some really old, really strong MICS (Mortgage Investment Corps) out there
2/
Week ago I called for the death of private mortgages
And yet we still see offers for private mortgages?
Dead Lender Walking?
Let& #39;s break it down
There are some really old, really strong MICS (Mortgage Investment Corps) out there
2/
/2 They are well managed were always careful and mainly Private First Mortgages, some have billions under management, many over $100M
They never lent over 75% loan to value, some averaging much lower
They& #39;re okay, there will be pain but they& #39;re going to be fine
3/
They never lent over 75% loan to value, some averaging much lower
They& #39;re okay, there will be pain but they& #39;re going to be fine
3/
3/ Then there are "the others"
Range in size from as small as $5M up to big ones, common feature: New
Founded last 5 years mainly by mortgage brokers
So: no previous mortgage admin background, no legal expertise, no experience in loan defaults, nada
Just selling loans
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Range in size from as small as $5M up to big ones, common feature: New
Founded last 5 years mainly by mortgage brokers
So: no previous mortgage admin background, no legal expertise, no experience in loan defaults, nada
Just selling loans
4/
/4 Good at roping in investors too, many Acredited, many NOT, some Mom &.Pop
I am NOT saying these MIC operators had bad intentions at all
But many liked the high 14% to 18% yields of second mortgages and the ease of selling them
And some went to 85% loan to value
5/
I am NOT saying these MIC operators had bad intentions at all
But many liked the high 14% to 18% yields of second mortgages and the ease of selling them
And some went to 85% loan to value
5/
/5 Queue the funeral music
Oh and BTW some of them lent to small developers and on raw land: Yikes
90% of second mortgages were refinances so they were for people in debt already, now those folks take deferral from their bank on the first mortgage
Yowsers! TROUBLE
6/
Oh and BTW some of them lent to small developers and on raw land: Yikes
90% of second mortgages were refinances so they were for people in debt already, now those folks take deferral from their bank on the first mortgage
Yowsers! TROUBLE
6/
/6 Deferral causes the first mortgages to GROW eroding equity
Top 3 Bad Things for Mortgages:
Unemployment
Unemployment
Unemployment
Oh 4th Thing: Property Value Decline
Payment default only has one effective remedy: Power of Sale Action
The Courts are Closed
7/
Top 3 Bad Things for Mortgages:
Unemployment
Unemployment
Unemployment
Oh 4th Thing: Property Value Decline
Payment default only has one effective remedy: Power of Sale Action
The Courts are Closed
7/
