|
|
| |
|
  |
Money for Breakfast Fox Business NetworkNovember 01, 2007 1:00 PM - 2:00 PM DAGEN McDOWELL, co-anchor: More Americans losing the battle to keep their homes. The number of people facing foreclosure in the third quarter doubling from the same period last year, that according to RealtyTrac, an online marketplace for foreclosed properties. Can we expect this situation to get even worse, and how long is it going to last? Well, Bob Moulton is chief and founder of Americana Mortgage Group, and he's joining us now. Bob, what do you see, in being in (sic) the mortgage brokerage business? Are you seeing--are you--do you expect this to go on for months, if not a couple of years? Mr. BOB MOULTON (President & Founder, American Mortgage Group): It'll probably go on, Dagen, for at least a year, maybe a year and a half. It seems that, you know, in the peak of the real estate boom--2005, 2006--a lot of homeowners bought houses with 228's or 327's. McDOWELL: Can you explain what those are, Bob? Mr. MOULTON: It's--it's--it's a product that's fixed for two or three years normally at an introductory rate, and then after the initial two-year period, it will increase to a rate that could be twice as high as what the introductory rate was, or it could be fixed for a three-year period. So if they started at 4 percent in 2005 and it's adjusting after two years, in 2007 they could be faced with a payment that's twice as high as what it was when they started, which could be at 8 percent. McDOWELL: But-- Mr. MOULTON: And-- McDOWELL: But--go--but, Bob, longer-term mortgage rates have been moving down, so these are people who are facing or in the midst of interest rate resets and they aren't able to refinance--right?--because either they don't have equity or they don't have good credit. Mr. MOULTON: Well, it's a combination of both those problems, because the sales pitch when these products were written was, 'Take the 228, pay it on time for two years, get your credit current, and the house will be of greater value.' No one took into consideration that home prices were going to come down, number one. Number two, since we've had the credit crunch in August of '07 to the present, underwriting guidelines have gotten very, very strict. And what's an interesting phenomenon is that 60 percent of people who took mortgages in 2006 would not qualify under today's underwriting guidelines. So this homeowner, who has a teaser rate they took in '05 and '06, payments doubled, their value's down, and if they could qualify for a loan, if they were to get gift money from family, they still would not be able to qualify because they're looking for higher credit scores and the underwriter is looking for more equity in the deal. STUART VARNEY, co-host: I just want to summarize this, Bob. Am I right in saying that if I've got bad credit, I've got no money to put down, and I don't have really a stable job, I am not going to get a loan for a house, am I? Mr. MOULTON: If you--you're probably not going to get a loan, and if you are going to get a loan, it's going to be very expensive. VARNEY: Now-- Mr. MOULTON: It's not going to be at 7 or 8 percent; you're probably looking at 9 percent. VARNEY: But I've got no problem getting a loan, if I've got the 20 percent down payment, a steady employment record, and a good credit record. I've got no problem, right? Mr. MOULTON: Absolutely no problem. I mean, we're getting back to--to traditional financing, which is where we were before the age of the real estate boom. VARNEY: And am I right in saying this is a buyer's paradise, especially if you've got the 20 percent down and good credit. You could bargain it right down there, can't you? Mr. MOULTON: Absolutely, because there's so much inventory out there. There's a--and you can't fall in love with a house. If a buyer has a 20 percent down payment, they have strong income, they have good employment, they should put a bid in probably 10 to 20 percent below the asking and wait. And if it doesn't happen, move on to the next house. VARNEY: Go out there and borrow money from Bob Moulton. Thanks very much for joining us, Bob. Mr. MOULTON: Thank you. VARNEY: Good luck.
|
||||||||
| |
|