Why you should care about the Wall Street Mess in Salem Oregon
Well…things are happening fast and furious in the world of finance. Fannie and Freddie is old news.
In case you haven’t heard at 1:45 this morning, Lehman Brothers declared bankruptcy. In addition Merrill Lynch was bought by Bank of America (in a sell or go bankrupt move), and AIG will fail in about oh…48-72 hours unless bailed out. Lovely.
So, what’s this mean for local folks?
Well, nothing is set in stone (we are having a historic financial meltdown here), but here are some possible outcomes here.
Mortgages:
Most mortgage brokers seem to be speculating that the drop we had due to the government bailout of Fannie and Freddie will stick around for a while. Good news for home buyers.
Secondary Mortgage Market:
Some mortgage brokers are speculating that non-agency loans (ie loans that are not bought by Fannie, Freddie, VA, or FHA) will go by the wayside, at least temporarily. What this means is that credit will tighten as originators will have to charge more for these non-agency loans or just not do them. Remember banks have to maintain those loan to reserve ratios. If they can’t sell the loan they have to hold it. Not good for home buyers.
Other loans:
Tightening credit impacts car loans, home equity lines, commercial loans. This could potentially have a negative effect on local businesses trying to get a commercial property, a homeowner that wants a home equity line to remodel a home, or someone wanting to buy a car.
So if you are a buyer wanting to purchase a home, realize that all of your ducks need to be in order, but if they are rates are really good right now.
If you are a seller, realize that buyers are going to be harder to come by. Credit will be tightening even more. Don’t try and hold out for that extra few thousand or so. You may get less later.
Hold onto your hats folks…this is ugly.
(c) Copyright, 2008. Melina Tomson, All Rights Reserved (ie…be nice and create your own content. Don’t steal mine…)
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