Are $Trillions Of New Loans About To Be Pumped Into The Housing Market? | Melody Wright
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- Опубліковано 5 чер 2024
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A few days ago, an article appeared in the Financial Times revealing that "Last month, the government-sponsored mortgage finance agency Freddie Mac filed a proposal with its regulator, the Federal Housing Finance Agency, to enter into the secondary mortgage market, otherwise known as home equity loans"
The article's author, Meredith Whitney, claims that if approved, this "could begin to unleash almost $1tn into consumers’ wallets. By the autumn, it could be on its way to $2tn."
That would be a tremendous stimulus to the economy.
But is it a good idea?
Putting aside for a moment concerns of its potential inflationary impact, the Global Financial Crisis was a credit crisis triggered by bad housing loans. Would allowing the government-sponsored entities like Freddie Mac to unleash a flood of new loans risk repeating the sins of the past?
For answers, we're fortunate to turn to mortgage lending expert & housing analyst Melody Wright.
Melody, who was on the frontlines of the meltdown in mortgages during the GFC, is highly concerned this new lending scheme, if enacted, will end up disastrously.
(This interview was recorded on 5.7.24)
#housingmarket #homeequity #mortgageloans
0:00 - Less Home Equity Than Estimated
4:33 - Role of The GSEs
9:23 - Government Holds 85% Of Mortgages Now
13:16 - Does The Market Need More Home Equity Loans?
19:35 - What Are The Biggest Risks Here?
24:12 - Is This A Bad Idea?
34:48 - Is This Setting Up The Big Short 2.0?
41:09 - Melody's Latest Housing Market Update
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Does there have to be a commercial every 5 minutes? SMH
❤❤
Melody is one of the few HONEST people left in the Real Estate industry! Thanks for having her Adam!
Why didn't she respond to his opening question? Instead she deflected into a context she could have gone to later.
Melody is the single most knowledgeable person in this space. She knows every corner of this space. She has seen this play out before, and she was right there in the thick of it. And she actually tours the country and puts her own eyes on these fomo overdevelopments. LISTEN TO HER!
Thank you so much!
@m3_melody And Melody, please add a channel membership option to your UA-cam channel, so we can compensate you for all the work you do educating us 😁
She is great love her work and analysis.
OK thanks!! So how many times are you going to say space? Thank goodness you used caps at the end that must mean you are serious 😃😃🙄
@@Steven_Will SPACE
Adam, please have Melody return and take more time on this.
Me: Can things possibly get any worse?
US Govt: Hold my beer!
Hold my case of beer…
US Government employee, Elected, hired or appointed! 😂
Best not to ask the US gov’t that particular question.
Remember when you had to qualify for your mortgage and you couldn’t borrow more than you could PROVE you could afford? Those were the days!
You clearly.havent bought any real estate the last 16 years.
Keep renting junior.
Remember the days when your paycheck would keep up with the rate of inflation, I don't.
Shut up.
@@jaydeeare285 so that's how long the games been played. new way of doing this is better than?
What are you talking about?? Do you live in a 20 year lag time warp?
I agree with everything this woman said. "Everyone is delusional about the value of their home right now."
The value remains fairly stable, it’s the market price that’s delusional. Most people don’t know the difference.
That was the line I was thinking of commenting on, and WILL, above.
Thanks to both of you. That comment from Melody really hit home " some sellers are delusional about the value of their home"
Thank you so much for watching!
I am one of them. However, I’m fixin to git paiiiiid!
@@njerseydavidMaybe some buyers are not on a budget or have more discretionary spending:)
@@FloridaManConstructionAs long as buyers are willing to pay...
@@njerseydavid I think the idea is that they're delusional in the sense that pricing no longer matches fundamentals, but hey sometimes things become whacked. We'll see who's right. If we hit a stagflation era then any real estate being bought now will probably work out. If we go through a crash, well the opposite is true.
“There are NO risky loans like in 2008!”
There is nothing more risky than a loan written on a $1.5MM home that was just $500K 2-3 years ago.
Especially when the market is driven completely by speculation and greed.
There are plenty of bad loans like 08' Most were misled about about the truth in 08' Market crashed! I took out a 5 year arm in 2001 and in 20 years it went up 2 times. 1st time was 1/4 % and 2nd time was 1/8%. every other years it adjusted down! Most who borrow money in in excess of conforming loans do arms... Ie the people with money.
I strongly agree the market is driven by speculation and greed.
Government does not see Risk! It just prints more money. 😂😂😂
Yep. There is no risk office. The GAO AND CBO are just told shut up by politics
I suspect they do but they are so short term they'd trade away the risk of a stubbed toe today against the risk of a fatal heart attack tomorrow.
Government does not care.
@@michaeljacobs4546 They’ll be long gone when this goes belly up
And then we assume all the risk with our own investments but when we do eat, the government gets a piece of the pie. What a sham.
Worked with Melody in the mortgage industry for over 20 yrs, and no body explains it better than her
If homeowners are delusional about the value of their home, what about the tax appraisers? Paying increased taxes on bogus value.
Absolutely. And when devaluation happens, taxes will not be reassessed. Only some allowance of postponement or forfeiture. All planned.
@@brendabadih8855you must be a renter
You sound like a renter
@MrSteeDoo I'm literally the best stock trader in the world and I rent. Owning a home right now is stupid. Bad investment
Old saying: "When you delay the inevitable, the consequences will be worse."
As hard is to listen to Melody's hard facts, people need to heed the warning signs. Thank you both Melody & Adam!
I dont see a warning other than youre missing out for not going max leverage
Calling out this kind of BS is what took me from being a stellar Freddie Mac employee in 2005/6/7 to getting pushed out for not being a team player in March of 2008.
I still feel vindicated. Lol! 🤣
Melody is one of your more insightful guests. Always a very interesting and on a subject that affects all of us.
I got wrecked in the GFC with $100k of student debt. Took a long time to claw my way out of it and just paid it off with zero help. So where's my incentive for doing the right thing? This whole thing is an outrage.
I think a good middle ground would be to make bankruptcy apply to student loans after a set period of time. Punishment, yet freedom.
I've paid back my original loan amounts I borrowed, but still owe on pure interest accumulated from having them.
Why should I have to pay back double? I technically paid back what I borrowed. Just because "that's how it works?" WELL 17 year old me didn't realized how it worked and no one told me. They just said good luck. Not that I think people should just be given a free ticket. But if you've paid back the orginal amount. I think you should be able to wipe the rest and interest rates on student loans shouldn't exceed more than 3%.
Your incentive for "doing the right thing" should be that you know how much it sucked and shouldn't want other to have to go through that. Rather than. Being bitter and wanting people to suffer. Again, not thinking it should be a free ride. Just what I stated above.
@@opiedrums6969 aaaand there it is! When you signed the loan papers they told you the interest rate. Did you sign at 3%? If you didn't then you pay what you signed for. BTW you paid back all the interest due on the last monthly payment and some of the principal. Double the payment and the principal goes down. Principal goes down less interest next month. Because that's how it works!
Gov't is intent on doubling down on all forms of stimulus. It's not fair
@@opiedrums6969 you should have to pay back the interest because that's what you agreed to pay the taxpayers.
As a loan officer for over 30 years I can attest to what Melody says. When I started in the business in the late 1980's 90% of loans I originated were portfolio loans and only 10% were GSE loans. Back then they were called saleable due to the fact they were sold to the quasi governmental agencies.
I'm a cranky dude and don't always leave the nicest comments. But when Melody talks, I listen. She does real research and has a deep knowledge of the industry. Always happy to hear her point of view 👍
Excited to have Melody back on. I love when you have her to discuss residential RE, as well as when you have Nick from Reventure (in addition to your surprise guest appearances on Nick's channel).
Stop using your house as ATM live below your means get out off debt .Debt free is freedom do not be slave
Adam, you interview people who have worldwide reputations, undeniable Giants..., but Melody is my favorite recurring guest
I was surprised what the banks were willing to loan me in 2020 for a mortgage. No way I could take out that much money. I’m fairly financially literate, I have savings and no debt. But the thought that they’d loan me
as much as they did doesn’t mean I can afford it. There is no financial counseling that comes with the loan. So many financially illiterate
Sorry for your loss, you would be significantly wealthier today if you bought that super expensive house. 2% 30 yr fixed mortgage........
@@jvancek nope! If you can’t afford it it doesn’t matter the interest rate.
@@MasterRoss-sn7dl Right! - Just because you can, doesn't mean you should.
Thankful Melody is your guest. She is amazing!
Thank you so much and thank you for watching!
Adam always appreciate so much when you have Melody on not only because she is absolutely brilliant in her field, but because she also has such a caring beautiful soul for humanity and their plight in these very difficult times.
Those kind words mean a lot. Thank you so much and thank you for watching.
Generalisation but women tend to have a more caring attitude - it's baked into biology and proven by data. For example, when it comes to nurturing the environment, when women are involved in decision making about taking care of it, the environment improves.
I agree.
Individuals still need to take some responsability for their own finances
The invisible nature of taxpayer subsidies for everything is very damaging to society. Before handouts people would ask their friends or family to help when they fell on hard times. Now people just go and cash a cheque from the taxpayer.
@@Jalleur14325
replace the word "people" with banksters.
A fancy way of banks offloading their junk loans on the taxpayer.
It’s this feeling of turmoil and uncertainty that’s kept me out of the housing market
For the last 3 years. I had to talk my girlfriend off the FOMO ledge & convince her to rent for a little longer. When I saw what I was paying versus what I was getting I stopped looking at houses. It was my feeling then that if I chose to buy I would soon be apart of the delinquency crowd.
It's a terrible time to buy for sure
3 years, I am over 5 years waiting 😭 But i feel like we are right on the cusp of another 2008 or worse crisis
As a part time realtor watching. I was assuming this is gonna be dull. Then she spoke street level stuff. And the dark fraudulent stuff intertwined with Govt? Where at some point the people will be throwing the poop into the Govt’s fan? I started to love her.
Whatever the guvmunt touches turns to shit, call it the anti-Midas effect, which has a double meaning considering how they are trashing the dollar that once was as good as gold and now is becoming toilet paper.
Melody's non-financial advice about continuing to build human capital through education and curiosity is perfect. Resiliency, adaptability, robustness, anti-fragility, diversification are the keys to surviving a world that is constantly changing.
Melody is amazing! Get her back!
Thanks for having Melody on the show! I need to listen to the first half. Sh*t show is coming! The real pain from 2008 was not felt or recognized until late 2010 & 2011. I know - started my business in June 2008 and made it through by grace and relentless work!
How can people be surprised about the forbearance amount being put on the back of the loan. Did they think the banks were gonna just cancel about 2 years of payments? At least it was non interest bearing.
you'd be surprised how many thought that!
Considering corporate and student bailouts I would assume that most thought they didn't have to pay.
The plan is to squeeze every ounce of value from the consumers, foreclosure them, blackrock et al hoover up the distressed assets and then they'll permanently rent and live in precariously.😅 🤗🤗🔥
Rents are too high already. People are living with their parents. There isn't large glut of potential renters aching to rent at even higher prices than today. There are zero new renters because they can't afford rent. The youngest can least afford it and yet they're supposed to be the most renters.
Blackrock may get properties, but once they try to realize the gains on those properties, they'll collapse housing and rent prices because they're the biggest owner of houses.
This is the problem with real estate. If you own huge amounts of it, when you begin selling you immediately change supply in the market which puts downward pressure on prices.
This is why their gains are only on paper. As soon as they sell back into the market, they'll evaporate most of their gains.
If they hold tons of empty properties, the upkeep and taxes alone are a huge cost -- if you don't pay to maintain the empty property, it will fast go to seed.
Except US is getting a influx of new renters from across all boarders.
Melody is amazing!!! Love that you had her on.
CGX ...............she brings the Knowledge !!!
Absolutely zero about this in the financial press. We thought that we had a different set of problems than in 2008 but SURPRISE! With the other problems that we are facing this time around this is like the cherry on top of brain cancer for the economy.
Having sold last year, thinking this was going to play out, This is getting better by the minute !! Melody on fire !!
Listings are being price reduced across the board….. that’s not consistent with an inventory shortage. Tax and insurance costs are SKYROCKETING. Builders are providing huge incentives….. the clock is ticking on the start of National price declines
My homeowners insurance doubled this year
😡😡😡😡😡😡😡 sick of this childish government.
There are 2 guests on your show that whenever they come on I’ll drop whatever I’m doing to listen to what they have to say . Melody is one of them . Thank you for bringing her on to share her insight on the housing market . The second guest is Danielle DiMartino Booth .Please bring DDB back so you can continue the discussion about Basel 3 endgame .Love your show !
Agreed! Danielle & Melody are the best. Adam as well.
This is by far one of your better and informative interviews.
So Basel III decides it’s too risky for banks but not for Uncle Sam to provide these loans. That makes so much sense - not.
It’s hard for me to be sympathetic to people who are in over their heads with their mortgages. How can new buyers be so ignorant of what they can comfortably afford??? Doesn’t anyone do simple math anymore? When I bought my very modest home in 1998, I “knew” what I could comfortably afford. I “qualified” for more house than I bought. Both the realtor and the lender tried to persuade me to buy bigger and better because I “qualified” for more. Very few people would be envious of my humble home. That’s okay. It’s bought and paid for. Trouble is, everyone thinks a simple home like their grandmothers isn’t good enough. Suffer then.
This, in conjunction with the involvement of BlackRock , Vanguard and other big 'stakeholders', in the real estate market, will result in "you will own nothing and be happy". Thank you Adam for your excellent interviews and content. Thank you Melody for your invaluable insight.
How about the number of people that joined the military because college was not an option because of money or to gain access to the GI Bill to help pay for school and gave the ultimate sacrifice?. Makes me sick.
Meredith Whitney's article... was just nuts! I feel like our so-called thought leaders are dragging us by the nose to our financial destruction.
Trust your feelings. Or gut or intuition. Or just do the math . I will gladly pay you Tuesday for a hamburger today.
How were people not aware that the skipped payments were being tacked on to the back of the loan with interest still accruing?
They were told. No free lunch.
I totally agree and witnessing.. "Most people are dillusional about the value of their homes....".
Government sponsored car loans are bound to be next.
Gonna stay in the rv This year.
Excellent topic, smart guest
A great interview. If the govt is about to throw more money into the economy, expect house prices and inflation to go up. To save housing, it might cost the overall economy.
In a nutshell liquidity is constantly being pumped in all aspects of this financialized economy. There is no finance just refinance.
Welcome Melody! Our all time favorite expert! I’ve learned more in the last year from your informative education than all our years since purchasing our first home in 1970.
I see Melody’s name, I click on the video! Easy as that!
It still blows my mind how people use their roofs as a speculative asset mabe I'm old fashion but I was brought up that your house is not to be touched under any circumstance now I hear people changing houses like if it was a used car trading it in for the new model crazy
Part of the cause for that is that the job market, which is more mobile than it used to be. People move to another city or state to follow a career. The company may ask them to relocate. But in many cases employees are chasing better opportunities. It's rare to stay with a company for 10-20 years anymore.
That's exactly the mistake Australians and Canadians did for the last 20 years.
Thanks for having Melody On. Love her🎉
A much better interview by someone with specific knowledge in a specific sector about a specific proposal. The narrowness is a credit to the presentation, rather than these grand, sweeping program about the economy
As someone who works in the non-bank world, I would benefit greatly by having access to second liens. However, I'm not a fan of anything tied to Govt being tied to second liens. In 2007, I did a loan for a Redskins Cheerleader who sold season tickets. Tickets went from $4k to $8k for two club seats in three years. She said, "Everyone just said I can use my equity line." When banks then cut all their HELOCs and lending tightened, guess what...ticket sales dropped HARD. She also lost her job selling tickets...Easy access to home equity, while it still exists already with local banks, is at it's core, very inflationary and adds extreme risk during a downturn for whoever holds the paper.
I'm in big banking and they are mostly out of housing.
Adam you are a very important human, keep it up sir, thousands and thousands are listening and benefiting from your work. Much thanks!
Wow, thank you!
Enough of these garbage loans, let it crash!
That's the plan crash it and buy it back for pennies.
Amazing knowledge base from the Lady ... Awesome video ... Thank you.
I love Melody! She's so knowledgeable. ❤
Melody Wright is unique with her combination of knowledge, experience and honesty. She seems to be free of platitudes and the usual "move on-nothing to see" overstatements when it comes to the real estate market. Looking forward to listening to her again😊❤
Outstanding interview with an outstanding guest. Well done both of you!
Talking about unemployment rates, I talk with a lot of people who have recently been through large life changes. One of those, is loosing a job. I know two people who have lost their full-time jobs. In both cases, they each found two part-time jobs which do not match the income they had been making. Is the government counting each of these situations as an increase in employment?
Great interview. Smart lady. I learned a lot, AND, national reports do not really play into what I do!
I have collected a five homes in nice neighborhoods and 'the value' of the places slowly go up. Older, with more bugs, perhaps. And yet the amount of USD to buy one increases.
For me the game is to take whatever rental income we derive and put it back into the place as required. Less income is fine. We have jobs.
What I like is when there are constant letters and calls from people who want to buy what we have. We do not sell anything as the way to build wealth is in owning solid money making property. When rates are low we can tap into the (large) equity for large amounts of cash to help us get the next one. It's a game to which we are fortunate to have access. Not too many people are so lucky. I feel sorry for people who do not have the mental capacity to figure out how to get into a proper house. I want to help others do so.
Adam: Inflation matters less when you live in the place for a few years and day by day, fix it with your own hands.
Absolutely spectacular 🎉🎉🎉 Well said, great interview and collaboration.
BONKERS!
Melody is the best! Thanks for having her on. It's always a pleasure. I don't think anyone else out there can provide such an honest and down-to-earth perspective.
FNM and Fred are now owned by the govt, so any mortgage default losses will be borne by the govt./taxpayers. Govt has been taking the profits from these loan sales and spending them on social issues. No bailouts needed, losses will just hit the national debt
Follow a handfull of financial channels, this is my favorite. I always watch Melody's videos when I see them on any channel. Both of you produce phenomenal work.
Thank you!
She's brilliant !!
I love it when you have Melody on
Thanks or having her back
Thank you both
Love Melody's info and perspective, she is one of my favorites!
Great interview, and love Melody -- fantastic discussion, highly informative and valuable. Thank you!
Melody is by far your best guest, cheers
Selling new builds to investors is something I’m making a video on. Lennar sold a whole block in a new build neighborhood to an investor (next to families), investor is now selling some bc couldn’t get rent they expected
Hey there! This is one of my biggest fears.
Great news about them both being able to wish the rent up and extort people to live. You guys have any matches?
@@m3_melody Fear? I think this is wonderful news - bulk investors losing money on single family homes.
The biggest problem of HEL and HELOC is that they have adjustable rate, and interest rate keep going up, your payment s going up as well and even though you may be able to still afford you first loan, that second loan may trigger a foreclosure. Ms Wright is right, that seems like a horrible idea.
The Means Of Production owns both parties, the media, the companies that own the media, they fund them with advertising, and they own academia, and they own all the judges appointed by both parties that they own, and they censor people like me with the platforms they own. That’s why “nobody’s talking about it”.
Great interview, really explains yet another way the govt wildly distorts markets.
One of the largest sectors I am seeing in mortgage defaults are the people who bought in 2021-2023 thinking they would become the next Air BnB mogul. Those people bought with the projections they would be rented 22-27 nights a month. When they tried to flip them to long term rentals the max rates do not cover the mortgages.
Love to hear Melody’s insightful expertise. Thank you for having her on.
Thank you Melody for sharing your deep insight.
The stats on loans under 3% are for all to see. Those are what are slowing down the market and why we will NOT have a 2.0
I love Melody and your discussions with her!! A great follow on Twitter. Looking forward to listening to this interview. ❤
Love to listen to here perspective as always. Adam thank you for excellence in guests.
Melody... Please come visit Las Vegas. I'd love to get your perspective on this housing market. I moved to Las Vegas from Austin last year and as an Austin home owner I'm in a similar situation to many others with a nice low mortgage rate and good equity. It took me 6 months to get it rented after a couple price decreases. Saturated! As I've watched the housing market decline in Austin in the last year I've seen the opposite in Vegas and I'm at a loss to explain it. Locations are different. Vegas seems to have low inventory, migration mostly form California and a decent employment environment keeping prices high but it's not nearly as diversified in terms of employment opportunities as Austin. Frustrating. Vegas feels like a heavily manipulated market at the moment.
An absolutely phenomenal interview. I follow Melody and she is awesome.
UNBELIEVABLE! Wow, Melody is amazing and thank you, thank you Adam for having her on. I'm signing up to support you...as a result.
Wow, thank you!
@@adam.taggart Done! Thank you.
Student loan forgiveness is one of the absolute most messed up things of our generation. It's disgusting.
What's worse is the corruption of the universities in jacking up their fees as soon as the government offered loan help.
The whole system is a rotting ball of corruption.
More than $1.9 Trillion tax cuts to the super wealthy? You SUCK!!!
That isn't close to the most disgusting giveaway financially. Not remotely close.
@@brn2863 There's a reason why I said "one of", my dude. I know there have been bigger and badder ones. Bailing out the bankers in 2008, for example. But this? This is sowing division that is largely along political party lines since democrats are mpre often the ones who went to college and rack up debt for it that isn't easily paid off by the jobs they hope to get. As such, there is contention sowed, and that's dangerous. Knowingly bailing people out on this without addressing the discord and discontent it would cause is disgusting.
Thanks for the educational podcast. Covert equity withdrawal loans and 85% non-bank GSE sponsored mortgages, unlimited open fiscal spending like IRA, forgiven student loans, record high military spending, sustaining Ukraine Gaza wars, stirring conflicts in the South Sea and Taiwan strait manifest themselves into the skyrocketing national debts exceeding $34T and persistent inflation.
Excellent guest, very insightful
Fascinating guest. Obviously a bad idea so the Government will approve Freddie Mac HELOC.
Melody I am happy to hear a person who understands what is happening to the consumer and also a good look from a political and financial point of view! The picture is clear that the government represents the financial industry not the people.
Great interview - I've been following Melody for a good spell now, but really cool to see how much she has improved with her presentation style (her data and insight has always been invaluable). She should be on once a month (along with Lyn, Luke, and Doomberg). And good on ya Adam for calling out gov't manipulated data/policy.
Super job on your interview by Melody and Adam, Keep up the great work.
Great interview! Thank you for getting Melody on to go through this important new development. Let's see how it all pans out.
The big short 2.0 is commercial real estate
The most feared and dangerous words in the English language, I am here from the Federal Government and here to help you. Burying them in debt they can never pay back. I guess the big funds will clean up the mess.
Great interview with Melody, Adam! Thank you both!
very timely discussion. Adam, thanks for bringing Melody in.