Posts Tagged ‘Life’

If the world is literally flooded with dollars, why is it near impossible to refinance a home or refinance and restructure outstanding consumer credit?

Merrill Lynch is offering a Libor based adjustable rate mortgage for up to $2,000,000 for the current rate of 2.375% with NO POINTS!!!! How many are applying? Very few.

Why? Loan to Value requirements have dropped by on average 20% while appraised home values have tumbled as well. Additionally, if the home is located in a state where the values are declining, then the penalty box of “declining market” is applied and the LTV limits are reduced further.

Credit card companies continue to reduce available credit. Analysts expect that the US will see credit line reductions of $2 trillion dollars in 2009. They also expect credit card rates to continue to sky rocket rather than decline in parallel with the Libor, prime and the Fed funds rate.

Hence, headlines may be deceptive.

With the further expected declines in employment levels and compensation, as well as further tightening of credit and increases in cost of consumer credit, there likely is significantly more pain to come for the consumer-class and homeowner-class ignored to this point buy the bailout plans and liquidity programs of the wealthy rulers in DC and their Wall Street financiers.

Happy Holidays!!!

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