Sshhh! The Show is Starting
"The nation's troubled housing and mortgage markets will decline even further before they rebound, a prominent mortgage executive told a gathering of real estate agents at Cal State San Marcos on Friday."
"Robert A. Camerota, Sr., senior vice president and manager of GMAC's Mortgage group in Coast Mesa, sketched a bleak forecast for the housing industry: falling home prices, increased foreclosures, more failed mortgage companies and increased revelations of mortgage fraud."
'"We're all going to be struggling, struggling more than we are today," he said. "We're headed halfway down the mountain, and we've got a ways to go."'
"Camerota's company, GMAC, is one of the nation's largest subprime mortgage lenders. The increasing failure of the company's borrowers to repay subprime mortgages has cost the company more than $1 billion already and could cause General Motors, part-owner of GMAC, to take a major financial hit, according to an article distributed Friday by Dow Jones Newswires."
"Camerota said that guidelines proposed Friday by federal regulators to tighten mortgage lending requirements and reduce problems in the "subprime" mortgage market were necessary. But, he added, they would dramatically decrease the number of new mortgage loans issued, as well as mortgages refinanced."
"He also predicted more subprime mortgage lenders would fold. He noted that New Century Financial Corp. of Irvine, one of the nation's largest, was laying off hundreds of workers on Friday. The company disclosed Friday that a federal prosecutor and the New York Stock Exchange are investigating the trading of its stock."
"Revelations of mortgage fraud, the use of bogus income and tax documents by borrowers to obtain large loans, will increase, Camerota predicted. He said that, contrary to what some legislators propose, no new laws are need to combat mortgage fraud."
Instead, he said, "We need to go to the attorneys general and the district attorneys. We don't need more laws. We need more enforcement."
"Realtors in attendance noted that the booming real estate market of recent years created a "perfect storm" for problems now surfacing: low interest rates, rising property values and lenient lending standards led to buyers taking on larger homes and bigger mortgages than they could afford."
"One Realtor said that buyers contributed to the problem, by wanting to "keep up with the Joneses," and to buy their dream homes: "Our clients were saying, 'Supersize Me!' "'