If the Fed Lowers rates again ....

[4RE KLR]

Tampa,
I guess your right.

I still believe that the Fed should NOT lower rates right now. It is because of the past zero% loans that a lot of people are in trouble. I think it would cause people to get back on the borrow, borrow, borrow boat. That is simply not good for anyone, except the credit card companies.

If the Fed would leave the rates alone and let the losses be taken by the mortgage companies, and yes many, many homeowners. I think it would create a more stable outcome. I do think they might need to lower them in the future to help get the housing market back in line.

Once the mortgage companies take back the millions of homes they will have to insure them, maintain them, pay taxes, security water electric, winterize etc they might just realize they have created this themselves. We may as well face it, things will not get better until the mortgage companies get their act together.

I had a client yesterday that had A+ credit, 22 years on the same job as an engineer. 30% down. 8.15% interest 30 yrs fixed. The bad part is they took the appraisal and would usually finance 80% of appraisal. No longer. They took 100 % of the appraisal, and deducted 20% from that, then they would only finance 80% of that figure. That is just stupid. Now the mortgage companies are in panic mode and have basically shut down all home loans. I realize there are other companies out there but it is just stupid what they are doing now.

You would be surprised at how many people I see that have new cars with zero % interest rates. They are on VERY short notes. For example a $65K Mercedes on 18 months. Payments were almost $4,000.00 a month. The guy was trying to buy a new house, so he could then borrow the equity and pay off the car. I still can't figure than one out.