Is it Time to Short the Home Builders

Is it Time to Short the Home Builders


Is it Time to Short the Home BuildersAmidst all the happy talk about the housing industry from the “This is not a Bubble” to “Everything is wonderful” every time we get new figures about how the median price of a house nationwide is up again, I saw this headline: Is It Time To Short The Home Builders?

Diana Olick of CNBC  from an interview with the CEO of Chase Mortgage:

“FHA requirements are down to a 520 FICO (credit score) and you only have to put 3.5 percent down; that’s sub-prime lending, and we’re not in the sub-prime lending business,” said Kevin Watters, CEO of Chase Mortgage Banking.”

Chase Mortgage and the largest mortgage lender, Wells Fargo and not lowering their standards and it is making realtors unhappy. The biggest source of “sub-prime lending is coming from small independent mortgage lenders.

After the housing debacle of 2007-2009, “…instead of forcing loans upon those who cannot afford them, the agencies should be tearing up their loan applications, advise (potential home buyers) to practice austerity, save up some money, and clean up their household balance sheets, rather than think about buying a house on margin.”  After all how many payments do you have to skip to “earn” a 520 FICO score?

Another item that does not sit well if you are bullish on housing is the number of families that are priced out of the housing market. Rents are a huge percentage of yearly income and home ownership is creeping up to 30% of income, which is above lending standards. Soon, we will have an affordability crisis resulting in more than one family sharing a single home.

Noted author Bethany McLean wrote, “Shaky Ground,” about the critical condition of Fannie Mae and Freddie Mac. McClean describes the government’s profit-taking a prime example of political dysfunction.

“Here we are seven years after the financial crisis and these two are still supported by a lifeline from the U.S. Treasury,” said McLean. “Basically the U.S. government has decided to sweep all their profits and use them as a little slush fund for budget deficit reduction. They have no capital, none, and this despite the critical purpose they serve of guaranteeing most Americans’ mortgages.”

“The government has an addiction to GSE’s profits,” said McLean. But if they suffer a loss, they will need to draw from taxpayers. We are talking a massive systemic problem in the works.”

At Homebuyers Choice, LLC we are connected to our community and want the best for the people who live here. We are here to help homeowners out of any kind of distressed situation.  As investors, we are in business to make a modest profit on any deal, however we can help homeowners out of just about any situation, no matter what!  There are no fees, upfront costs, commissions, or anything else.  Just the simple honest truth about your home and how we can help you sell it fast to resolve any situation.

Homebuyers Choice, LLC is part of a nationwide group of thousands of investors who are helping tens of thousands of homeowners every year.  We may not be the “traditional” route, but we CAN help and we can do it quickly.

Give us a call today at 818-629-2000 to let us know what YOU need help with!

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