Plunging Interest Rates

From the Washington Post:

Several readers complained that policy changes by Fannie Mae and Freddie Mac are limiting investors' ability to buy more of the surplus housing inventory.

Richard Moroscak Jr., a vice president with OlympiaWest mortgage in Lansdowne, wrote: "I get a call once a day from borrowers who are interested in purchasing an investment property. They have 780 credit scores, full documentation, cash for a 30 percent down payment or more, great assets besides real estate, etc. In other words, they're the perfect borrower in most lenders' eyes. But if they own more than four properties they do not qualify to purchase another investment property. Investors tend to own multiple properties.

"If they take a short-term hard-money loan, which is insane, they generally cannot refinance out of them. The result is foreclosure unless they find another hard-money loan. Investors are on the prowl, but in my humble opinion, the market would stabilize much quicker if they actually had access to cash."

A column about the risks to consumers' deposits if someone they're doing business with files for bankruptcy drew hard-earned advice from one reader.

"This happened to me, and I should know better because I used to be a lawyer who did a lot of debtor-creditor and bankruptcy work," said Ellen Paul of Chevy Chase.

"I wrote to my state legislators to suggest legislation that would require companies that take advance payment or deposits to be bonded for an amount reflecting the amount of deposits or pre-payments they held over the previous year. That way, we unsecured creditors would actually get our money back."