21–30 of 53 posts
If you really want to go down a rabbit hole of real estate weirdness, research why title insurance is required, and read up on some examples of fuckups that have occurred with land ownership records and scams...
Earlier quoted context omitted.
How is that the moral of the story? If anything, the government sponsored entities are artificially lowering interest rates which you can use to borrow, so it makes sense to take advantage of that cheap credit.
America, a supposedly a capitalist society. I expected Americans to be at least more finally literate than people from the bloc. Artificially low interest rates may well benefit you to some tiny extent, but imagine just how much more benefit is given to a bank. You still take an enormous risk, staking all your livelihood, and the bank get a near free way to make money. That's not equitable. The prime majority of peop…
Please please could someone recommend two or three books to get a more in-depth understanding of the history of mortgages, similar to what this (awesome!) video only briefly touched on.
Please please could someone recommend two or three books to get a more in-depth understanding of the history of mortgages, similar to what this (awesome!) video only briefly touched on.
https://www.calculatedriskblog.com/2008/12/compendium-of-tan...
I looked at turning these into an ebook (with permission from the family) but never got it published.
Yes, there are massive economic inefficiencies in the whole mortgage lending business and since a16z's motto is, "software is eating the world", there are opportunities for tech startups to disrupt all of that.
To spur discussion, I'd categorize "disrupting mortgage industry" into 2 general buckets:
(1) disrupting the procedural aspects of a mortgage : lowering the cost of moving the transaction from the "loan application" all the way to "closing". The worfklow aspects.
In terms of disrupting people, this means disrupting the loan officers at banks, appraisers, title searchers, surveyors, etc. In terms of disrupting "fees", this means reducing/eliminating "loan origination fee", "title insurance", and "survey costs". (A lot of these administrative overhead costs are basically a bunch of "checks & balances" to ensure the loan transaction is not fraudulent or has undocumented liabilities ... e.g. verify loan applicant's paychecks to make sure he/she really has a job with $x income, and the property's recent newly installed fence doesn't encroach on others' property lines creating a potential lawsuit.)
(2) disrupting the loan underwriting : This means lowering the cost of money. Today, we see that a 30-year mortgage in America is about 3.7%. Maybe there's a market inefficiency and a clever entrepreneur can lower it to 2.5%.
The vastly different problem-solving aspects of (1) and (2) will attract very different skill sets. E.g. entrepreneurs interested in (1) might think of reducing costs of surveys with robots/drones/satellites while startups interested in (2) might try to lower the "cost of money" by creating financial packages such as "500 co-signers on a mortgage that also receive a portion of the profits from the house's sale."
In the video, he mentions FNMA and FHMLC are the ones that buy home loans. Basically, it means that banks like Wells Fargo and JP Morgan Chase are glorified order takers. They charge a $1000 "loan origination fee" to sell your loan to the the government sponsored agencies. If the loan ultimately ends up at FNMA anyway, maybe there's a much cheaper way to accomplish that. (Although I doubt the FNMA website will ever have a landing page that says "Skip the banks and apply for a loan directly with us!")
This is really great content by A16Z. It shows how complex building a Fintech in US actually is , often due to how many different partners you will actually need to depend on. In this specific case , you would need to have each partners offer an API that you could call to automate the mortgage workflow. Obviously , due to the nature of the financial sector it's very likely those partners don't have those APIs and don…
Please please could someone recommend two or three books to get a more in-depth understanding of the history of mortgages, similar to what this (awesome!) video only briefly touched on.
You're not going got be able to find that type of knowledge in a couple of books. I used to work as an analyst programming mortgage prospectus documents and the one thing I learned is the system is purposely obfuscating and there are several incentive systems to keep this information private.
I've been thinking recently about just building businesses on reducing information asymmetry. Feels like you can't really go wrong there if all you want to do is make a few bucks. (Who wouldn't want to buy that?)
This is really great content by A16Z. It shows how complex building a Fintech in US actually is , often due to how many different partners you will actually need to depend on. In this specific case , you would need to have each partners offer an API that you could call to automate the mortgage workflow. Obviously , due to the nature of the financial sector it's very likely those partners don't have those APIs and don…
Myself and a few others woulc like to use cryptocurrency to enable fractional ownership of property where anyone in the world can buy and sell 'shares' or just own them as an investment. This is happening with art too.
Conversely, if we try to alleviate that, maybe a lender ends up on the hook for a call for their 10% of my $500K addition to maintain their pro-rata. That ends up subsidizing remodels which tend to pay back less than $1 for $1.
Earlier quoted context omitted.
How is that the moral of the story? If anything, the government sponsored entities are artificially lowering interest rates which you can use to borrow, so it makes sense to take advantage of that cheap credit.
America, a supposedly a capitalist society. I expected Americans to be at least more finally literate than people from the bloc. Artificially low interest rates may well benefit you to some tiny extent, but imagine just how much more benefit is given to a bank. You still take an enormous risk, staking all your livelihood, and the bank get a near free way to make money. That's not equitable. The prime majority of peop…
How are you staking your livelihood? Mortgages have no recourse apart from your home. Even then the foreclosure process takes anywhere between 1 and 3 years depending on the state and the bank is likely to offer you deferment or a modification so it doesn't have to go through the trouble and expense of foreclosing. The worst that can happen is your credit could be hit, but even that resets after 7 years. And since you seem so anti-debt I don't think you'd miss out on much.
The bank treats agency mortgages as quasi risk free paper, so the yields get bid down, so they don't make too much money holding this stuff