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The history and opportunity of the modern mortgage [video]

a16z.com

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Re: The history and opportunity of the modern mortgage [video]

#31

Post by bradleyjg »

jasode wrote: post #26

Another way of summarizing Alex Rampell's video: The mortgage industry is ripe for disruption. 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 proc…

As to number one and the last paragraph you write as if it is a one sided market—-as if anyone can come along and offer to fill out the paperwork cheaper than JPM. But it’s a two sided market. And the second side is a government monopsony. Companies in that space will need to compete to become a dominant government contractor. That’s a very different business than signing up the masses.

Regarding number two, you’d be competing against a currently near monopoly lender that has zero cost of capital, sets the rules of the game, and has no compunction about manipulating the underlying asset class. Good luck.

Re: The history and opportunity of the modern mortgage [video]

#32

Post by cheerlessbog »

baybal2 wrote: post #17
bko wrote: post #15

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…

> The prime majority of people have no genuine need to own a home

Many people, including me, value being able to do anything they want to the property, live in it as long as they want, know how much it will be costing them years into the future, and never have someone enter without their permission even (landlords can legally do this if there's an urgent maintenance problem). In my last rental I could not even paint the living room. They may also appreciate the opportunity to participate in any appreciation.

Re: The history and opportunity of the modern mortgage [video]

#33

Post by tonetheman »

jasode wrote: post #26

Another way of summarizing Alex Rampell's video: The mortgage industry is ripe for disruption. 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 proc…

As a recent consumer of a mortgage. I read your comment and really the fact that this comes from a VC... I am filled with skepticism.

I think it would be better to say that mortgage industry is another place where a VC can insert itself to make more money.

I am not sure as a consumer I will ever see anything from this "disruption" ... I am certain though I see a VC sucking more money out of the system.

Or even worse some sort of subscription based horror of a startup that will let me monitor mortgage something or others.

Re: The history and opportunity of the modern mortgage [video]

#34

Post by tw1010 »

mooreds wrote: post #24
tw1010 wrote: post #18

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.

I can definitely recommend this list of posts by Tanta, who worked in the mortgage industry for years: 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.

I would love you if you sent me that ebook (email in bio).

Re: The history and opportunity of the modern mortgage [video]

#35

Post by skellera »

eof wrote: post #25

Having the talent standing in front of a whiteboard with a marker and never writing anything was an odd choice by the director.

The animation style is drawn. Probably just to get you thinking like you’re watching someone draw it out.

They also could’ve played with the idea that he did draw or drew afterwards and edited in the animations instead. Might make more sense since he’s holding the marker.

Re: The history and opportunity of the modern mortgage [video]

#36

Post by bradleyjg »

bko wrote: post #30
baybal2 wrote: post #17

Earlier quoted context omitted.

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…

> You still take an enormous risk, staking all your livelihood, and the bank get a near free way to make money... middle class Americans who got screwed by "a low risk mortgage" 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 modificatio…

> Mortgages have no recourse apart from your home.

Only in some states.

Re: The history and opportunity of the modern mortgage [video]

#37

Post by nintendo1889 »

This is true.

What about group ownership? There's a building in the new york city area that is mainly owned by the tenants. So that by paying the mortgage, they are really buying more shares in the corporate entity that owns the building. Then they never lose that equity in the property.

Re: The history and opportunity of the modern mortgage [video]

#38

Post by grogenaut »

baybal2 wrote: post #17
bko wrote: post #15

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…

I'll bite... How is the alternative, renting, better? Constant financial and time risks due to leases and landlords and the money never comes back to you.

Re: The history and opportunity of the modern mortgage [video]

#39

Post by acjohnson55 »

sarah_k wrote: post #27
echopom wrote: post #14

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.

Why does this require cryptocurrency?

Re: The history and opportunity of the modern mortgage [video]

#40

Post by ghaff »

cheerlessbog wrote: post #32
baybal2 wrote: post #17

Earlier quoted context omitted.

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…

> The prime majority of people have no genuine need to own a home Many people, including me, value being able to do anything they want to the property, live in it as long as they want, know how much it will be costing them years into the future, and never have someone enter without their permission even (landlords can legally do this if there's an urgent maintenance problem). In my last rental I could not even paint…

Those are really the key things. Buying a condo vs. renting a similar place? Sure, you can run financial calculations--and should--but a lot of factors that go into whether one or the other is the optimum financial decision are unknowable to a greater or lesser degree. Will housing prices go up or down? What will interest rates do? Will you have to turn around and sell the property quickly for reasons? Will maintenance expenses be more than you anticipated?

Much bigger are things like stability vs. mobility, being able to change aspects of the property to your liking, and whether you can even rent the sort of property you would like for an extended period.

Also "need" is an odd word in this context. I own and do a lot of things that I don't "genuinely need." But I'm happy for them anyway.

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