EVERY mortgage created is bought and placed into a MBS, (Mortgage Backed Security) bond, or a CDO, (Collateralized Debt Obligation).. Every single one.
Right now everyone who bought into the moratorium concerning their mortgage and has not paid their mortgage for, say, 6, 9, 12 months, is actually in default.
ALL of those mortgages are in MBS bonds. Another word for them is called derivatives.
Now once the mortgage goes into default the note becomes junk.
Any MBS, or CDO will likewise become junk.
Now, WHO is exposed to these MBS's or CDO's?
First, BANKS. In fact banks are over leveraged with these derivatives.
Then we have pension funds, retirement funds, to name two. Think about WHO maintains pension and retirement funds. Damn near everyone.
Let that sink in.
I am calling it right now.
An impending MBS bond market crash is coming because of the government sanctioned moratorium. This will affect everyone.
Now, lastly, the government had no place to inject itself, as a third party, into a two party contract, and dictate any change to the contract.
When it initially happened I knew the government was setting up an epic fail situation, and any mortgage holder who went along with it, unwittingly, assisted in the coming crash. Right along with the mortgage industry.
An MBS bond market crash is coming. Bank on it. No pun intended.
This would drop new construction prices i assume? My wife and i just got back quotes to build a house that are about 100k higher than we can tolerate, even expecting high prices.
Yes. Hold off for now.
The vultures are circling.
Right?! Went to Home Depot to price some material for a building project I WAS going to do. 1/2 " OSB is 38.00 a sheet. 2x4x8's are over 6.00
WTF?!
Put that project on hold for now.
Millions of mortgages aren't being paid at all, since the moratorium was put in place.
Most people getting those checks were paying utility bills and buying groceries.
We only got the first check.
It is my opinion that it will start sooner.
Courts are reopening now across the country.
Mortgage companies will begin to blaze a trail to the courts once the moratorium expires. Then the dominoes start falling like an avalanche.
Yep, buy during a dip.
That seems logically like what i would expect, others have said the fed will do anything to avoid another 08. Sold my house in December, sitting on a bunch of cash and moving in an inlaw suite. Quotes from builders earlier this week were 25% worse than i expected and lead to an untenable mortgage considering that the house is only 2100 sq feet. I'm afraid we'll just end up with nasty inflation and my cash will be worth nothing but i can't really find a way to improve that situation. Bonds/etc run basically nothing.