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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Banks are not banks anymore Posted by Rick, the Probate Guy on September 24, 2006 at 8:26 AM In Reply to: Re: DELINQUENCIES posted by Bob Smith on September 22, 2006 at 3:49 PM : I doubt banks are at risk in any significant numbers. Banks are not "banks" any more, they're financial services companies that sell their loans to Wall Street bond houses and retain servicing fees for back end profit. Only the very safest loans are kept in-house. Their profits may drop precipitously if originations stagnate, but unlike the mid 80s they have little or no financial risk from a real estate meltdown. National bond markets, on the other hand, are at serious risk, as are the major brokerage houses who have given yield guarantees to the bondholders. ================================== Bob - Very good post. You are so right! Banks AREN'T banks very often anymore. If I recall right, hard money lenders (which is how I started) got serious competition from institutional lenders around 1989/1990 from "banks" like Guardian Savings & Loan and Long Beach S&L. I think GSL was about the first sub-prime lender to sell their paper on Wall Street. I can remember when I'd occassionally call their nationwide customer service # for a payoff and this became their voice greeting: "Welcome to Guardian Savings and Loan. If your mortgage is in foreclosure, please press "1" now..." It really did get that bad. So, what do you think is going to happen this round? Rick Follow Ups: Re: Banks are not banks anymore Bob Smith 9:17 AM, 09/25/06 (0) Post a Followup: Name : E-Mail : Subject : Comments: : : I doubt banks are at risk in any significant numbers. Banks are not "banks" any more, they're financial services companies that sell their loans to Wall Street bond houses and retain servicing fees for back end profit. Only the very safest loans are kept in-house. Their profits may drop precipitously if originations stagnate, but unlike the mid 80s they have little or no financial risk from a real estate meltdown. National bond markets, on the other hand, are at serious risk, as are the major brokerage houses who have given yield guarantees to the bondholders. : ================================== : Bob - Very good post. You are so right! Banks AREN'T banks very often anymore. : If I recall right, hard money lenders (which is how I started) got serious competition from institutional lenders around 1989/1990 from "banks" like Guardian Savings & Loan and Long Beach S&L. I think GSL was about the first sub-prime lender to sell their paper on Wall Street. I can remember when I'd occassionally call their nationwide customer service # for a payoff and this became their voice greeting: : "Welcome to Guardian Savings and Loan. If your mortgage is in foreclosure, please press "1" now..." It really did get that bad. : So, what do you think is going to happen this round? : Rick Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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