What happened?

Everywhere I go I hear people asking each other “what happened”? Why are the global financial markets [ America in particular] in such turmoil? Sad to say, that in my opinion it can all be summed up in one word; GREED! However, a more incisive review will uncover that it was a confluence of events which conspired together to bring us to where we now find ourselves. I’ll now give you my thoughts on what I think those events were;

overzealous real estate developers (too much inventory)
unprecedented ease of access to credit (excessively lax mortgage requirements)
no accountability for mortgage lenders (mortgages were sold to the secondary market)
sub-prime borrowers who lacked the ability to repay the mortgage
real estate investors who intended to buy and flip got stuck with the investment property
mortgages for investment property went bad after investor could not sell the property
investors could not sell the property because the price was too high compared to the excess inventory price

Some observers called it a perfect storm of seemingly unconnected events which in the end did irreparable damage to the US and global financial systems. This economic tsunami was like I said before, triggered by greed. Real estate investors were bragging about how they were flipping two or three houses monthly and earning upwards of 50% - 100% profit on the flip. Banks were eager to give away money to undeserving applicants through the most liberal loan product ever seen in organized banking; “Stated Loans”! No supporting documents were required, just “state” your income, bring in the sales agreement, appraisal, credit bureau report and the loan was approved.

It’s not hard to see now how this could all go sideways very quickly. Unsophisticated speculators borrowing money that they could not afford to repay (unless they had a successful flip), and the lenders didn’t seem to care since the mortgage would not reside with them but with the investors in the secondary market. So as the chickens came home to roost as the store clerk could no longer flip his $750,000.00 condo on Miami Beach, foreclosure was next logical step.

Multiply this above scenario by hundreds of thousands of people and its easy to see why the economy is the way it is. The final straw that broke the camels back came when the foreclosures began, the bonds that they were securing became worthless as the intended interest at maturity of the bond was completely in doubt.

For more information, email us at info@xmloans.com.

From the President’s desk….

Whatever the outcome of the upcoming US elections, the Bahamas should benefit from the increased consumer confidence of that party’s faithful. Be it a democratic or republican president, we know for sure that close to fifty percent of the American electorate will be inclined to spend more money as a result of their party’s victory.

Your monthly mortgage tip:

Secrets Lenders don't want YOU to know!

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For those who may be concerned about their deposits in local banks, if you have Fifty thousand dollars or less than in any one bank you need not worry. Your money is insured by the Deposit Insurance Corporation (DIC) and in the event the banks collapse, your deposit (up to $50,000.00) would be repaid from the DIC.

To find out if your bank is a member of the DIC, email us at info@xmloans.com.

KNOW THE FACTS – NOT EVERY FINANCIAL INSTITUTION IS A MEMBER!

1(242) 225-3873 or 1(800) 303-3934
www.xmloans.com

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