And Now, the End is Near

Two events today have indicated to me that the economy is about to go nose dive.

One came from Federal Reserve Chairperson Janet Yellen in her prepared remarks in front of the Senate Banking committee.  She announce “Irrational Exuberance 2”, the sequel to Alan Greenspan’s mention that tech stocks are too high based on no backbone.

Yes, there is no basis to the valuations on some companies that have not put together dollar 1 in profit, yet have spreadsheets making them worth billions.

I am sure there are a few that deserve that price, but many don’t.  Even the people writing the algorithms don’t agree with the numbers that are projected.  In order for free markets to exist, they must have valuations based on realities, not wild speculations.

The other came in the form of an email.  Our new hero for ending the economy is Kevin DeLory, Regional Sales Manager at Carrington Mortgage Wholesale.  I received an email from Mr. DeLory today since I am a mortgage broker that he wants to do business with.

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Even though I have told Carrington on numerous occasions that I do not want to wholesale to them, they continue to keep me on their list….lucky me and now you!

Today’s email threw me back to the good old days of 2005-2008.  Notice what he touts as a great reason to use them: Low Credit Scores!  Yes, everyone, you can have crappy credit and get a home loan!  Your score can be at dogdew level of 550 and get into a home with No Money Down.  Haven’t we heard this before?

Yes, you may have to qualify to make the payments. but the bottom line is, Mr. DeLory and his company are begging the federal government to insure and/or guarantee mortgages that we, the taxpayers will be liable for after they go bad.  It’s the late ’00 decade all over again.

If you are a mortgage broker, I urge you not to do it.  Don’t originate these loans.  Real estate agents should do the same.  Make people improve their credit and understand what they are getting into.

FHA, VA and USDA, please change your guidelines with the guidance of the CFPB and Senator Elizabeth Warren.  Help….stop the madness!

 

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