Posted by Anita Posluszny on 8/6/11 8:35am
Msg #392866
The Country's Credit Rating
Heard on the news that our country's credit rating has be downgraded to AA+ and that this will affect interest rates. This will clearly hurt our business. What are your thoughts??????????
| Reply by A S Johnson on 8/6/11 8:57am
Msg #392869
From what I've been reading, interest rate should go up.
I would think many will think "the sky is falling" get busy to lock in the current rate. If rates do rise in the next couple of weeks, we should bave a number of assignment in the next 4 to 6 weeks. Then, who knows...
A secondary effect, this should drive many of the newbees, those who accept low ball rates out of this business beause of the lack of business and they can't make that "easy, get rick quick" money XYZ promised.
Something that keeps nagging me, wasn't it these same credit rating agencies who put "good to excellent" rating on all those "junk" mortgage bundles that created this whole mess in the 1st place.
| Reply by Susan Fischer on 8/6/11 9:19am
Msg #392870
Yup, S&P doesn't have a lot of wiggle room here, they're
such great predictors of debt repayment...
\sarcasm\
| Reply by Moneyman/TX on 8/6/11 1:33pm
Msg #392885
I agree. It depends on what people will focus on
that can make a difference in business. Some will see it as a great opportunity to fill the pipelines and help people to lock in the current rates now while others will sit around in despair and wounder why others are doing better than themselves.
| Reply by Alz on 8/6/11 5:24pm
Msg #392904
You hit the nail on the head! n/m
| Reply by Rebecca Burskey on 8/6/11 5:49pm
Msg #392906
I couldn't let it not be known, that the reason for the mortgage melt down was not so much for the ratings from Moody's and the like but from the Wall street creation of a product called CDO'S or credit swaps. AIG created the first waive of these and even when they figured they were bad the money was too good to pass up. This was all created for the Inland Empire Region of Southern Calif. And as they say from here it was all down hill from there. Just passing along the info.
| Reply by topflyt on 8/6/11 7:18pm
Msg #392909
Hey, I work the Inland Empire...THAT'S why I've been so busy! lol
| Reply by JanetK_CA on 8/6/11 7:51pm
Msg #392916
Actually, I believe AIG just insured the CDOs - in enormous quantities - for the wall street investment houses and didn't hold enough in reserves (I think I read it was somewhere around 30%). When people started defaulting en masse on their loans, the CDOs plummeted in value and investment companies (Lehman Brothers, for example) tried to collect on their insurance. AIG didn't have the funds to pay all the claims and as a result, our economy was "suddenly" on the brink of collapse. Hence, the bailout.
For some countries, this may be a factor in some of the current financial troubles they're having. Iceland, for example, was courted heavily by US brokers to invest in CDOs (many of which became pretty much unsellable) - and I'm not sure, but Greece may have been another one.
But yes, I feel it's very ironic that the rating agencies highly rated some of the very companies that were heavily involved in the risky creation and trading of the default swaps, even as they were dropping in value, and that helped lead to our current situation.
The silver lining for us in all this - from an article I was reading earlier (directly or indirectly from a link I saw posted here) - is that other potential investments around the world are doing even worse than US Treasuries. It was some convoluted but logical reasoning that indicated that more money might flow to Treasuries, causing downward pressure on interest rates, at least temporarily. Some will find a way to take advantage of this and continue to generate some business.
BTW, I walked into a signing this morning with a guy who is in finance. His first words to me were "This is probably the last loan you're going to be signing." LOL!! His wife kept chiding him to stop being Mr. Gloom and Doom...  Personally, I'm convinced he's wrong and that there will be a fair number of folks like him who will refi one more time - and hopefully even manage to qualify - to take advantage of the low interest rates. But the qualification process may get even tougher than it's been.
The bumpy ride continues...
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