Mortgage Lenders Face Heat from Investors
As subprime mortgage loans continue to go bad (and investors and others continue to lose money) many mortgage lenders are seeing pressure from many directions. Not only are subprime writedowns affecting them in terms of profits and share prices, but investors in loans wrapped up in securities — and those bought outright as investments — are starting to make demands as well.
As the home mortgage loan market continues to struggle, investors want lenders to buy back their loans. Mortgage News Daily reports on the demands investors are making on mortgage lenders:
Investors, including Freddie Mac and Fannie Mae, are taking a long look at loans they have purchased from lenders over the last few years and the contracts that govern those purchases and are trying to force banks and mortgage companies to buy back growing numbers of troubled loans.
Many loan sales are governed by provisions that require lenders to take back loans that default unusually fast or contained mistakes or fraud.
This whole mess is based on badly-advised loans given to people who — in large measure — had no business getting the loans in the first place. There is plenty of blame to go around: Society with its “instant gratification” fixation, lenders and brokers eager to make money off loans with higher interest rates, borrowers who looked for ways to get what they really couldn’t afford, investors not actually checking to see if they were making good decisions, de-regulation that allowed the government to turn a blind eye to what was going on.
And, unfortunately, there is no”quick fix” to the mortgage market crisis. Instead, things are going to have to work through the system. And hopefully everyone will learn from this and make better decisions in the future.
Tags: subprime mortgage loans, mortgage lenders, home mortgage loan, mortgage loan blog,
mortgage market crisis, mortgage news, mortgage loan market
