One in every family
In the past five years I suddenly knew lots of people who were mortgage brokers. In fact in our extended family one individual was arranging everyone's mortgages. It seems most of the clients were friends and family. Loans arranged included an Interest Only loan, a No Doc loan and a 3 yr ARM. Since the end of the bubble this has now naturally brought about some extremely strained relationships. I imagine this is common and brokers network of clients usually began right in the family or circle of friends.
Comments
Interesting and relevant post. I have a brother-in-law who became a mortgage broker about four years ago. He specialized in sub-prime and to listen to my sister and him, the party was never going to end. They were the financial geniuses and I was an idiot for not jumping in on the so-called opportunities with our incapacitated mother's funds. Because of this difference of perspective and other things, bad vibes evolved between us and we haven't talked to each other for 18 months.
I strongly suspect he may not be a mortgage broker anymore.
Fast forward 4 months. When I saw him last week his employer was laying off 40% of the staff, mostly because they couldn't write any loans. He said there are still plenty of buyers wanting to do business - it's just that there is nobody willing to take the other end of the deal.
I do not disagree that if you were lucky enough to time the market there was the potential to make big bucks. With 20-20 hindsite, I wish I would have bought / sold just as you suggested. In my case, my sister and brother-in-law had no funds to invest of their own and I wasn't willing to "gamble" with my mother's funds, especially since she may really need those funds for her care later on.
The thing that really got to me was the total, unshakeable belief of my sister and brother-in-law that this was the new economy, that real estate never depreciates, that rich immigrating Californians were going to sustain the boom forever, that with the new financing products affordability was never again going to be a problem, ............... readers of this blog have heard it all before.
I actually had a pretty big fight with the Christmas dinner host that were friends with my gf for a long time, because he was getting very emotional when I ask for supporting evidences that this trend would continue forever. He suggest that market value of 5 years ago is way undervalue, and current medium price is the new basis for future gain. Then he proceed by suggesting immigration and old money were the factors on the appreciation.
Anyway...I learned not to talk about housing bubble with anyone, because the notion of real estate depreciation is still unimaginable for most people.