The sub-prime meltdown actually began in December 2006, when lenders did away with stated 100% investor loans and it has gone much, much further since then.

Estimated losses due to foreclosure of Adjustable Rate Mortgages actually adjusting this year and next year are in the billions, if not trillions, and lenders are responding by removing products from their portfolios.

Like anything else, the mortgage market is driven by supply and demand, and the supply actually comes from Wall Street Banks who are willing to buy closed loans from Mortgage Lenders.  Previously, Wall Street had a seemingly insatiable appetite for sub-prime loans, “alt A” loans, and jumbo loans. (The press has combined everything that isn’t “A Paper” into the heading sub-prime, when actually sub-prime loans are loans with substandard credit, not non-conforming agency loans.)

Alt A Loans are loans that are A Paper loans, but with alternative documentation – stated income, stated asset, no doc, etc and therefore don’t meet Fannie Mae and Freddie Mac ‘s conforming loan underwriting standards.

And obviously Jumbos, Super Jumbos and Mega Jumbos could be prime, sub-prime or alt a loans, as far as the credit rating is concerned, and the documentation likewise could be any level.

The press and Capital Hill with their multiple legislation attempts have all lumped together any loan that is not fully documented, conventional loan limits and a plain vanilla 30 year fixed rate into the now hated “sub-prime” category.  Neither the press nor the legislators have the time or inclination to learn the vagaries of the mortgage business and do their jobs “on the fly” as it were, and so, there is bad information and misinformation flying everywhere.

With the losses Wall Street Banks are experiencing in foreclosures of all kinds, they’ve lost their appetite for anything other than strictly “A Paper” loans. They aren’t buying much, and so, the supply of money for mortgages has gone to an historical low.

Click here for information about Non-Purpose, Non-Recourse Loans

Stated owner occupied loans for purchases and refinances are topped at 90% LTV; stated investor loans for purchases and refinances are also topped at 90%, and credit score requirements s for everything have gone up to levels previously regarded as pristine. That is, of course if your home is not a multi-million dollar purchase or refinance and then you are really looking at 65% to 70% max.

Estimates for the duration of this dearth of funds range from six months to two years. With the programs available for refinances, and talked about to become available for refinances, to the rational mind, it seems that this shouldn’t last forever. The strange thing is that borrowers who are in trouble don’t seem to be trying to do anything about their foreclosures because the numbers just keep getting larger every month.

FHA Secure for instance will allow a refinance of a mortgage already in default, with no regard for the late payments if they occurred after the loan’s interest rate adjusted.

The FHA is, in my opinion, the sub-prime loan of choice – the rates are as good as, conventional interest rates, and when that is combined with the fact that they IGNORE late payments, I would think people would be clamoring for those loans.

Additionally, if the value of a house has gone down during this market turbulence, and the property was originally bought with a first and a second, they will allow the second to stay, even if the LTV goes over 100%.

Fannie Mae and Freddie Mac are considering raising conforming loan limits above the $417,000 maximum presently allowed in order to assist borrowers in California (where less than $417K doesn’t get you much of a home).  While this was regarded as a probability earlier on, it seems to have lost steam lately.

And finally, there is the possibility of a work out arrangement with the lender to whom one is late. While it may not be the perfect arrangement because at this point in time the fees allowable on forbearance workarounds are still very high, there is legislation pending that will limit the amount mortgage companies can actually charge for late fees, payoffs, forbearance, etc.

If you’re buying one of those million dollar bargains, be prepared to appear at the closing table with big bucks.  If you’re interested in refinancing your ARM, Get BUSY.  Opportunities abound, and the country is going to be in trouble if they aren’t refinanced.

For those with money invested in marketable securities, there is a golden opportunity to cash-in on the tremendous RE investment opportunities now available.  Today, there are multiple commercial & residential RE properties available for about 30% to 50% of what they were only two years ago.

For example, CEOs, CFOs or COOs, with large publically traded companies, who have large blocks of Corporate stock or other marketable securities can leverage those assets to take advantage of investment opportunities.  If you are a forward-thinking investor who wants to retain the future ownership of your assets as well as leverage the present value of your securities for immediate cash needs, this can be a terrific program.

These loans are –

·         Simple & Quick – NO Credit Check / NO Income Verification

NO Upfront Fees / NO Closing Costs / NO Personal Guarantee

·         Loans are “Non-Purpose” – loan can be used for virtually anything borrower wants to accomplish (personal or business)

·         Loans are “Non-Recourse” – giving the borrower the opportunity to simply “walk away” if the collateral falls below a set floor amount

·         High Loan-to-Values – up to 80% LTV (depending upon security); which is much higher than banks and brokerage companies can offer

·         Loans are Interest Only – principal payment at maturity; otherwise loans can be refinanced or extended

·         Low Fixed Interest Rates – usually between 2% to 4%

·         Loan Term – minimum of 3 yrs; also 5 yr / 7 yr / 10 yrs

·         Quick Funded – usually within 5 to 7 business days

Click here for information about Securities Based Lending / Stock Loans

A secured loan is loan that requires borrowers to offer their property as collateral. Bankers also call this an asset based loan. this reduces the risk for lenders and they charge low rates of interest. Unsecured loans, on the other hand, do not require collateral and consequently, they carry high rates of interest.

One type of secured loan you may not have considered is a securities loan where borrowers use their stocks or other securities to get non-recourse financing for any business or personal use.

As we all know that there are no free lunches in this world, but there can be affordable lunches, such as loans that use your assets in the form of a house or a car or your stock certificates as collateral. This basically means that you get cheap secured loans against the equity of your asset and if you default in paying the secured loans, the lender can liquidate your asset to recover his money.

So, what can you use secured loans for?  If it’s a securities loan, this type of loan is also known as a “non-purpose loan” because it may be used for any business or personal use. Secured loans offer the benefit of borrowing with lower interest rates and lower monthly repayments as compared to unsecured loans.  Securities loans are normally given with quarterly or semi-annual interest payments, however they can be structured to have no debt service payments.

In today’s world of economic uncertainties, for some it may be difficult to make ends meet, let alone save for a rainy day. For others, like corporate officers, such as the CEO or CFO of a company, who have common corporate stocks that they may not want to sell there may be a “golden opportunity” for them.  These people can use their corporate stocks to take advantage of today’s Real Estate prices which are significantly reduced and may offer opportunities to purchase RE for 40% to 50% of what it was appraised for only two years ago.
On the other hand, what do you do when faced with unforeseen expenses like a medical emergency? The easiest solution to this is acquiring a secured loan, which you may use as bridge loans in an emergency. With securities, you can easily apply for a secured loan, which will not only give you some emergency cash in hand, but also a relatively low interest that you can pay back overtime.

Securities lending through ICON Commercial Lending offers the following benefits:

• Simple & Quick – NO Credit Check / NO Income Verification/ NO Upfront Fees / NO Closing Costs / NO Personal Guarantee

• Loans are “Non-Purpose” – loan can be used for virtually anything borrower wants to accomplish (personal or business)

• Loans are “Non-Recourse” – giving the borrower the opportunity to simply “walk away” if the collateral falls below a set floor amount

• High Loan-to-Values – up to 80% LTV (depending upon security); which is much higher than banks and brokerage companies can offer

• Loans are Interest Only – principal payment at maturity; otherwise loans can be refinanced or extended

• Low Fixed Interest Rates – usually between 2% to 5%

• Loan Term Flexibility – minimum of 3 yrs; also 5 yr / 7 yr / 10 years

• Quick Funded – usually within 5 to 7 business days

• Borrower Maintains Beneficial Ownership – borrower keeps all upside market appreciation. In addition, borrower receives credit against their interest payment for all dividends or interest on bonds. An added benefit is that the lender is responsible for taxes on the dividends during the loan term. It is a loan (not a constructive sale) per section 1058 of the IRS Code.

• This is NOT a Margin Account Loan – A securities based loan is not a “margin account loan”. These loans have significant advantages over conventional margin loans. Here is some differences between ICON’s Securities-Based Lending and margin loans -

1. Typical Margin Loan – FULL Recourse loans — additional liability, fees, and penalties may be assessed.

ICON Securities Loan – 100% NON Recourse with NO Personal Liability; you may walk away from an ICON loan with no penalties & NO negative credit reporting.

2. Typical Margin Loan – For many brokerage houses, a credit requirement has been added as a qualifying factor.

ICON Securities Loan – ICON does NOT check your credit nor income.

3. Typical Margin Loan – 50% LTV ratio

ICON Securities Loan – Up to 80% LTV ratio; depending upon securities’ trading volume and liquidity.

4. Typical Margin Loan – Variable higher interest rates (typically 5% to 8% ARM’s)

ICON Securities Loan – Fixed lower interest rates from 2% to 5%

5. Typical Margin Loan – Not all NASDAQ, AMEX, NYSE stocks are “marginable.”

ICON Securities Loan – Loans available against all types of securities that qualify (including OTC:BB, “pink sheets”, and certain foreign exchanges).

6. Typical Margin Loan – are not allowed to lend on stocks valued at less than $10.00 per share.

ICON Securities Loan – we offer the loan on any share price.

7. Typical Margin Loan - If the share price drops below 75 percent to 80 percent of original total stock value, a margin call is initiated and may you normally have only one day to cure the default, which may result in the unwanted sale of your securities.

ICON Securities Loan – ICON has a flexible process to “cure” your loan default.  ICON’s “call” is set at 80% of the loan amount (approximately 65% of the stock value) and we offer 5 days to cure the default instead of only one day.  Since ICON’s loans are non-recourse loans, if the borrower cannot cure the loan default they may simply walk away.

Click here for information about Non-Purpose, Non-Recourse Loans