Posted by Hugh Nations Signing Agents of Austin on 10/17/07 9:35am
Msg #216898

Mortgage bankers predict continued slide

ASSOCIATED PRESS
Wednesday, October 17, 2007

BOSTON — The nation's $2 trillion-plus home mortgage business won't halt its slide anytime soon, with mortgage originations expected to fall 18 percent next year and another 6 percent in 2009, the Mortgage Bankers Association predicts.

And although a forecast to be released today offers no hope that a housing turnaround is near, the industry still foresees a future for the subprime market, the association's chief economist said.


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"It will come back," Doug Duncan said. He added that he expects a shift to far stricter lending standards for people with spotty credit.

Total mortgages written are expected to decline nearly 15 percent this year to $2.31 trillion, from $2.73 trillion last year. Originations are expected to fall at a slightly steeper 18 percent next year and then begin to decline at a slower 6 percent rate in 2009.

The 2009 increase in originations is based on the association's expectations that home sales and prices will begin picking up that year.

The group expects sales to hit bottom in the third quarter of next year, after existing-home sales decline a projected 12 percent this year to 5.72 million units sold. Existing-home sales are expected to decline a further 10 percent next year before growing 5 percent in 2009.

The association forecasts a 2 percent home price decline this year and next year, with prices flattening out in 2009.

Duncan said the subprime niche won't dry up entirely. But he said subprime borrowers will have to make sizable down payments before securing a mortgage loan and will have to offer documentation of their incomes, employment histories and credit standing.

Reply by WDMD on 10/17/07 9:47am
Msg #216901

"Duncan said the subprime niche won't dry up entirely. But he said subprime borrowers will have to make sizable down payments before securing a mortgage loan and will have to offer documentation of their incomes, employment histories and credit standing."

There's a novel idea. Make the borrower prove his income and actually have to make a down payment. On another note from Hugh's posting about the decline in mortgages, did everyone really expect things to go like they had been for the past few years? Sooner or later things had to cool off.

Reply by Lee/AR on 10/17/07 10:55am
Msg #216915

Frankly, it lasted longer than I ever thought possible. I do think it will continue to slide as we're not back to 'normal' yet. It's a cycle and it hasn't hit bottom yet.

Reply by Kevin/Ct on 10/17/07 11:37am
Msg #216928

CBS News had an interesting item on this subject this morning. Both the Secretary of the Treasury and the Federal Reserve are concerned that the housing slump is going to pull the entire economy into recession. The continued decline in housing prices will produce fear in the consumer which will slow his spending.

Consequently they are taking steps to relieve the situation by working with major lenders to restructure loans rather than foreclose on them. It is their belief that reducing the foreclosure properties dumped on to the market will reduce the amount of cheaper housing on the market, and end price stagnation. They are also working to relieve the credit crisis to make mortgages more readily available.

They are also looking at a complete overhaul of the mortgage industry to stop abusive business pracatices.

Reply by Lee/AR on 10/17/07 5:00pm
Msg #217005

Now that could work! One can hope...

Re-structuring the horrible loans could work. A wholesale bailout of borrowers & the lenders that allowed these really dicey loans won't work.

Reply by JanetK_CA on 10/18/07 3:04am
Msg #217092

Re: Now that could work! One can hope...

I agree. As I heard one commentator put it, why bail people out for making bad decisions? On the other hand, lots of those people were misled and lied to by the so-called experts they counted on. I don't know how one goes about cleaning up the lending industry, but some effort there could be well worth it. Underwriting was so lax and conditions such that the apparent "easy money" attracted lots of bad apples into the field. Hopefully they will go play somewhere else. (Some of them, unfortunately, will probably look for some other way to take advantage of unsuspecting folks.)