Tag Archives: Housing

Warren Buffett on the Financial & Housing Crisis and Credit Rating Agencies (2010)

A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings. More on Buffett: https://www.amazon.com/gp/search?ie=UTF8&tag=tra0c7-20&linkCode=ur2&linkId=22f3a19f1003df6e04ad734879f32fb7&camp=1789&creative=9325&index=books&keywords=warren%20buffett

In most cases, the issuers of securities are companies, special purpose entities, state and local governments, non-profit organizations, or national governments issuing debt-like securities (i.e., bonds) that can be traded on a secondary market. A credit rating for an issuer takes into consideration the issuer’s credit worthiness (i.e., its ability to pay back a loan), and affects the interest rate applied to the particular security being issued.
The value of such security ratings has been widely questioned after the 2007–09 financial crisis. In 2003, the U.S. Securities and Exchange Commission submitted a report to Congress detailing plans to launch an investigation into the anti-competitive practices of credit rating agencies and issues including conflicts of interest. More recently, ratings downgrades during the European sovereign debt crisis of 2010–11 have drawn criticism from the EU and individual countries.
A company that issues credit scores for individual credit-worthiness is generally called a credit bureau (US) or consumer credit reporting agency (UK).

Credit rating agencies have been subject to the following criticisms:
Credit rating agencies do not downgrade companies promptly enough. For example, Enron’s rating remained at investment grade four days before the company went bankrupt, despite the fact that credit rating agencies had been aware of the company’s problems for months. Or, for example, Moody’s gave Freddie Mac’s preferred stock the top rating until Warren Buffett talked about Freddie on CNBC and on the next day Moody’s downgraded Freddie to one tick above junk bonds. Some empirical studies have documented that yield spreads of corporate bonds start to expand as credit quality deteriorates but before a rating downgrade, implying that the market often leads a downgrade and questioning the informational value of credit ratings. This has led to suggestions that, rather than rely on CRA ratings in financial regulation, financial regulators should instead require banks, broker-dealers and insurance firms (among others) to use credit spreads when calculating the risk in their portfolio.
Large corporate rating agencies have been criticized for having too familiar a relationship with company management, possibly opening themselves to undue influence or the vulnerability of being misled. These agencies meet frequently in person with the management of many companies, and advise on actions the company should take to maintain a certain rating. Furthermore, because information about ratings changes from the larger CRAs can spread so quickly (by word of mouth, email, etc.), the larger CRAs charge debt issuers, rather than investors, for their ratings. This has led to accusations that these CRAs are plagued by conflicts of interest that might inhibit them from providing accurate and honest ratings. At the same time, more generally, the largest agencies (Moody’s and Standard & Poor’s) are often seen as promoting a narrow-minded focus on credit ratings, possibly at the expense of employees, the environment, or long-term research and development. These accusations are not entirely consistent: on one hand, the larger CRAs are accused of being too cozy with the companies they rate, and on the other hand they are accused of being too focused on a company’s “bottom line” and unwilling to listen to a company’s explanations for its actions.
While often accused of being too close to company management of their existing clients, CRAs have also been accused of engaging in heavy-handed “blackmail” tactics in order to solicit business from new clients, and lowering ratings for those firms . For instance, Moody’s published an “unsolicited” rating of Hannover Re, with a subsequent letter to the insurance firm indicating that “it looked forward to the day Hannover would be willing to pay”. When Hannover management refused, Moody’s continued to give Hannover Re ratings, which were downgraded over successive years, all while making payment requests that the insurer rebuffed. In 2004, Moody’s cut Hannover’s debt to junk status, and even though the insurer’s other rating agencies gave it strong marks, shareholders were shocked by the downgrade and Hannover lost 5 million USD in market capitalization.

http://en.wikipedia.org/wiki/Credit_rating_agency
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Renting vs. Buying a home | Housing | Finance & Capital Markets | Khan Academy

The math of renting vs. buying a home. Challenging the notion that it is always better to buy. Created by Sal Khan.

Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/housing/renting-v-buying/v/renting-vs-buying-a-home-part-2?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets

Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/housing/renting-v-buying/v/renting-versus-buying-a-home?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets

Finance and capital markets on Khan Academy: Is it always better to buy than rent? What if home prices go up dramatically and rents don’t? How can we compare home prices to rents to figure out what to do. This older tutorial (low-res, bad handwriting) walks us through this. It is about housing but similar thinking can be applied to any rent-vs-buy decision (spoiler alert, Sal did eventually buy a home).

About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We’ve also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.

For free. For everyone. Forever. #YouCanLearnAnything

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Federal Housing Authority Accepts Prepaid Credit History For Home Buyers

3 credit bureaus
by Net Archive Book Images

FHA accepts pre paid debt card background. FHA tries to find a minimum of 12 month credit rating on non-traditional credit report. Wire, mobile phones, land line phones, lease, buy here pay here auto loan, rent out to possess, occupants insurance policy, vehicle insurance any kind of thing that you paid for YEAR or even more.

Pre-paid bank card allow you to establish bill payment with all of above. All settlements have to be paid in a timely issue to qualify. Pre-paid charge card reports to the credit score bureau on non-traditional credit rating if you sign up for the program. However remember it will also report unfortunate repayments too.

FHA needs minimum of 3.5% down repayment with acceptable credit rating. Yet some monies could come from gifts or gives. All collections should be paid in complete. Just permitted to have actually 1 contested creditor sometimes of application. Documentation must be offered contested lender.

There is no minimal credit history need, having at the very least 620 rating or higher will make you a much more major home customer to obtain approved. You likewise won’t be automatically disqualified if you have a personal bankruptcy or repossession if enough time has actually passed.

FHA additionally enables you to acquire a multifamily home as a home owner and the 3.5% still applies. This aids to raise a few of the concern off the a property owner. If you buy the home with an occupant and 12 lease holds. Rental earnings is included in your revenue to assist with your financial debt to income proportion.

All houses will certainly call for a house evaluations on all FHA home loan. Which helps see unforeseen problems in the future. The goal is that the resident will not have to go in making repairs after shutting. This remains in the finest rate of interest for the residence purchaser as well as the loan provider. Vendors makes repairs before closing.

The federal tax obligation credit history deadline has passed calling for buyers to have a residence under contract by April 30 has contributed to the appeal of FHA Loans. Supplying low down repayment, flexible underwriting, and also extra lenient credit rating needs, FHA finances assist very first time as well as modest earnings customers with affordable home financing options.

FHA guidelines are designed to deals more compassion for reviewing each customers require. Where Fannie Mae & & Freddie Mac does not offer flexibility for borrowers circumstances.

Get a duplicate of your credit rating report from all 3 debt bureaus to see where you need to begin. You will certainly be amazed what might get on your credit rating record. If you have no debt obtain pre paid bank card as well as start documentation on repayment background. Contact a Home mortgage lender to figure out your choices. What should be done to prepare your self to acquire a home.

Pre-paid credit cards enable straight down payment for pay-roll. Card to card transfer at no charge. Several have numerous cards. One for expense repayment and also an additional for spending money to stay within their budget plan & & one for their down repayment. Aids lots of achieve their goal as well as remain concentrated on the job handy.

Sadie T O’Neal experience originates from 15 years of home mortgage underwriting Make an application for your F * R * E * E Prepaid Card, that reports to the credit scores bureaus and also Lexus Nexus. Load card anytime as well as get.00 for online applications or call 1-866-787-4227 use coupon code: creditbuilderstoday. See Currently: http://creditbuilderstoday.com

Introduction to Mortgage Loans | Housing | Finance & Capital Markets | Khan Academy

Introduction to home loans. Created by Sal Khan.

View next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/housing/mortgages-tutorial/v/mortgage-interest-rates?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets

Missed the last tutorial? Watch right here: https://www.khanacademy.org/economics-finance-domain/core-finance/housing/renting-v-buying/v/renting-vs-buying-detailed-analysis?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets

Finance and money areas on Khan Academy: a lot of people purchasing a property need a mortgage to take action. This guide explains what a home loan is and in fact does some mathematics to determine exacltly what the repayments tend to be (the final video is fairly mathy so ponder over it recommended).

About Khan Academy: Khan Academy provides rehearse workouts, instructional movies, and a tailored understanding dashboard that empower learners to review at their particular pace in and outside of the class. We tackle mathematics, science, education, record, art history, business economics, and more. Our math missions guide students from preschool to calculus utilizing state-of-the-art, adaptive technology that identifies strengths and learning spaces. We’ve also partnered with establishments like NASA, The Museum of Modern Art, The Ca Academy of Sciences, and MIT to supply specific content.

Free of charge. For everybody. Forever. #YouCanLearnAnything

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Mortgage Interest Rates | Housing | Finance & Capital Markets | Khan Academy

< things type= "application/x-shockwave-flash" design= "size:425 px; elevation:355 px;" information="// www.youtube.com/v/vy_pvstdBhg?color2=FBE9EC&version=3&modestbranding=1" >< param name= "flick" value="// www.youtube.com/v/vy_pvstdBhg?color2=FBE9EC&version=3&modestbranding=1"/ >< param name= "allowFullScreen" value =" real"/ >< param name= "allowscriptaccess" worth= "always"/ > Comprehending how home loan passion prices are estimated. Created by Sal Khan.

See the following training:
https://www.khanacademy.org/economics-finance-domain/core-finance/housing/mortgages-tutorial/v/short-sale-basics?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets

Missed out on the previous training? See here: https://www.khanacademy.org/economics-finance-domain/core-finance/housing/mortgages-tutorial/v/introduction-to-mortgage-loans?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets

Financing and also resources markets on Khan Academy: Lots of people purchasing a house require a mortgage to do so. This tutorial explains what a mortgage is and after that actually does some mathematics to figure out what your repayments are (the last video is rather mathy so consider it optional).

Regarding Khan Academy: Khan Academy offers practice exercises, instructional video clips, as well as a tailored understanding dashboard that equip students to examine at their very own pace in and beyond the class. We tackle math, scientific research, computer system programming, history, art record, economics, and also more. Our math objectives assist learners from kindergarten to calculus making use of cutting edge, adaptive modern technology that identifies strengths as well as learning spaces. We’ve additionally partnered with establishments like NASA, The Museum of Modern Art, The California Academy of Sciences, and also MIT to offer customized material.

Free of cost. For every person. Permanently. #YouCanLearnAnything

Register for Khan Academy’s Financing and Capital Markets network: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Register for Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy