Subprime Mortgage Crisis sa Pinas - Can it happen?

[DonT]

What do you think guys? Is it possible? Or does the Philippine economy is more better or robust than the US? How much of it is Real Estate Related?

Did'nt the Asian Financial Crisis before which brought our Peso to its level now was also related to Real Estate problems of our neighboring countries?

I am just concerned that we have so much Megabuck projects like Condominiums and Sky scrapers now in Manila and I really do wonder if we can actually afford to have them?

Sorry po if I am confused or misled..Just trying to see what I can learn from the current crisis.

[Gen. Miting]

hindi mangyari yan dito. matindi ang screening ng mga bangko dito sa mga loans. halos lahat di-collateral

pero yun mga citi financial and other american style finance companies/institution, baka magbago na ng policy

[Altis6453]

I think in the US, a lot of banks and investment houses traded mortgage-backed securities. Meaning, an aggregate amount of loans secured by mortgages, but subject to very high interest rates, or sub-prime rates, because the borrowers were generally high-risk (i.e. bad credit history). So, banks and financing companies are able to generate cash for these securities (at lower amounts than the face value of the security) and the investment houses get their money later when the borrowers pay their loans off.

The dominos started falling when the borrowers started defaulting on their loans which resulted in a lower value for these securities, if not becoming outright worthless.

In the Philippine setting, there is no trading of these kinds of securities so there is very little exposure. There are, however, some banks who are able to buy such securities (supposedly, very little exposure) through international trading houses and they're probably writing their investments off as we speak.

[uls]

We have mortgage backed securities here.

As in LOCALLY orginated.

It is orginated by the National Home Mortgage Finance Corp. (NHMFC)

from an ABS-CBN news article:

The newly bailed out US housing firms, Fannie Mae and Freddie Mac, have a Philippine version: the National Home Mortgage Finance Corporation (NHMFC).

It works this way: The banks and residential property developers lend to house buyers. Since the banks and developers cannot lend to more aspiring house buyers if they have to carry big chunks of these housing loans or mortgages in their financial books, NHMFC comes to the rescue by buying these mortgages from the banks.

NHMFC then turns these mortgages around, then securitize or document them as financial currencies that they could then sell as bonds to potential investors. They are like financial intermediaries between people who would like to park their money in bonds and housing loan borrowers who signed a mortgage document where they promise to pay in a future date.

can subprime happen here?

it can.

will the govt just let it happen?

i hope not.

[shadow]

tingin ko hinde, the banks here are not as aggressive as their counterpart in the US.

[tidus1203]

IMO No it won't happen here. Banks here are more strict on handing out housing loans unlike in the US were they just hand out loans to anyone without any documents at all to prove credibility and income during the bubble years.

[tidus1203]

IMO No it won't happen here. Banks here are more strict on handing out housing loans unlike in the US were they just hand out loans to anyone without any documents at all to prove credibility and income during the bubble years.

[Galactus]

IMO, a subprime crisis can't happen here. Local bankers lack the sophistication of their US counterparts, and mortgage loans are not packaged here as they are in the States. Mas advanced lang talaga ang financial system nila, and even some economists there are complaining of the nature of certain securities which seems overly complicated.

Sa Tate, mortgage loans approach the complexity of derivatives and even esoteric particle physics equations. It's getting too hard to decipher for laymen to understand. Also, there is no potent middle-class here, the type who can afford to take and amortize decent housing loans. Lastly, uber conservative din mga banko dito.

Yung payment options din ng mortgage borrowers sa US, puwede rin ang interest lang ang bayaran, tapos balloon payments. Medyo risky yun pag dito gagawin sa Pinas, since balloon payments are not encouraged by banks for housing loans.

[uls]

Meron dito nyan.

the NHMFC buys mortgage loans and turn them into securities po.

National Home Mortgage Finance Corp. (our version of Fannie-Freddie)

NHMFC then turns these mortgages around, then securitize or document them as financial currencies that they could then sell as bonds to potential investors. They are like financial intermediaries between people who would like to park their money in bonds and housing loan borrowers who signed a mortgage document where they promise to pay in a future date.

[Altis6453]

IMO, a subprime crisis can't happen here. Local bankers lack the sophistication of their US counterparts, and mortgage loans are not packaged here as they are in the States. Mas advanced lang talaga ang financial system nila, and even some economists there are complaining of the nature of certain securities which seems overly complicated.

Sa Tate, mortgage loans approach the complexity of derivatives and even esoteric particle physics equations. It's getting too hard to decipher for laymen to understand. Also, there is no potent middle-class here, the type who can afford to take and amortize decent housing loans. Lastly, uber conservative din mga banko dito.

Yung payment options din ng mortgage borrowers sa US, puwede rin ang interest lang ang bayaran, tapos balloon payments. Medyo risky yun pag dito gagawin sa Pinas, since balloon payments are not encouraged by banks for housing loans.

This is what I wanted to know, actually. Are the securities bought/sold by NHMFC traded over the counter like those in the US? Parang wala kasi akong makitang ganun na exchange dito.