People like to joke that the bank owns their home. The reality is it’s likely a mutual fund or institutional investor in the booming secondary mortgage market. Issues of mortgage-backed securities have skyrocketed in recent years. A recent report from bond-rating agency Standard & Poors says that the second quarter saw the highest number of ratings downgrades in history for mortgage backed securities. The number of upgrades declined 33%, the number of downgrades tripled. A portion of this is due to the fact that low rates caused people prepay their mortgages. But it seems too that the mortgage industry has lent money to people it shouldn’t have and that’s a problem we may see more of.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.