Thoughtful Money with Adam Taggart The Big Short 2.0: Are $Trillions Of New Loans About To Be Pumped Into The Housing Market? | Melody Wright
May 9, 2024
Financial expert Melody Wright discusses the potential impact of $trillions of new loans on the housing market. They explore the risks of repeating past credit crisis sins, government influence in housing, and the implications of injecting new loans. They also discuss the risks of private note transactions and the speculative real estate landscape in Texas, while emphasizing the importance of curiosity and lifelong learning in turbulent times.
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Hidden Forbearance Balances
- Many homeowners are unaware of the forbearance balance added to their loans during COVID.
- This lack of awareness could lead to surprises when they try to sell or refinance.
Government Dominance in the Mortgage Market
- Government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac play a dominant role in the mortgage market.
- They back approximately 85% of all originations, making the market heavily reliant on government support.
Quick Mortgage Transfers
- Banks often sell mortgages to GSEs within minutes of origination.
- This rapid transfer obscures the government's involvement, with servicers appearing as the beneficial owners.