Loan Officer Gustan Cho
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GCA Forums News—National Business & Economic Roundup for Thursday, April 17, 2025
Introduction:
The U.S. faces a uniquely challenging moment alongside a volatile geopolitical landscape. The most pressing concern stems from the spike in mortgage rates, which complicates matters for homeowners, prospective buyers, and the housing market. The far-reaching consequences of this development are being observed in numerous industries, especially in real estate. The housing market remains a hot topic alongside the uncontrolled inflation and recession. Partisan fighting concerning the Trump tax policies isn’t helping the situation either. In the following sections, I will summarize important economic updates for your consideration.
1. Mortgage Rates Surge, Hitting 7.1% for 30-Year Fixed Loans
Mortgage rates have peaked yet again. The average rate for a 30-year fixed mortgage per mortgage survey conducted last week is 7.1% nationwide. This growth is unprecedented in the past few months. Fueling this growth is increased uncertainty surrounding the economy and mounting inflation.
Key Insights: Existing homeowners with sub-5 % mortgages are not refinancing, and new buyers are getting priced out of the market, exacerbating the economic environment. Reduced financial flexibility further constrains people’s ability to buy homes.
– Buyers Outlook: The ongoing 6.3% to 6.5% interest rates will likely cause additional strain to the sector. This translates to increased pressure on homebuyers due to higher borrowing costs, with sellers having a limited pool of willing buyers.
Home Price Prediction: Low demand does not impact prices, which are bound to increase by 3.7% annually due to limited housing inventory.
2. The Housing Market Struggles with Supply and Inventory Issues
The real estate market is continuously fighting a lack of housing inventory. This, coupled with a dip in demand, causes prices to rise due to the need for affordable options.
Key Takeaways: Existing homeowners are unwilling to enter the hostile market because they are selling at higher prices and lower interest rates, which would ultimately lead to a stale market, coupled with limited options for buyers.
Impact: Increased living expenses and mortgage rates make the market inaccessible for many prospective buyers.
3. Economic and Political Factors: The Impact of Donald Trump’s Policies
Burak Trump’s ‘tax wars’ have spurred unnecessary political focus on destabilizing the economy. His administration’s policies regarding tariffs and constant economic retaliation have made matters worse.
Summary: The GOP’s enforcement of tariffs, notably a 25% tax on Mexican and Canadian imports and a possible 10% tax increase on American goods, is raising eyebrows. It is stoking a speculative frenzy in the bond market and driving market volatility.
Possible consequences: These issues may continue to introduce political and economic uncertainty, further eroding investor confidence in the bond and real estate markets.
– Mortgage products are now more sensitive to events in the bond market.
Recent selling of U.S. Treasury bonds is putting increased strain on the mortgage and housing markets.
Summary: Growing inflation expectations and the bond market’s volatility are affecting the availability of home loans and reducing the accessibility of mortgage products.
Effects on lenders: The tightening market exposes mortgage lenders to higher risks as volatility in bond yields increases. This trend will likely continue to make mortgage loans more expensive and harder to obtain.
5. Outlook For The U.S. Economy: Inflation and Fiscal Policy
The U.S. economy shows some promise for growth. However, it remains speculative in nature. Speculation regarding its inflation, fiscal policy, and trade tariffs will always add economic stress.
Insight: Continued inflationary pressure combined with lingering fiscal Trump’s retaliation measures will most likely lead the market to a recession. The Federal Reserve must also be very careful because inflation expectations are soaring.
Market forecast: A slowdown in economic growth is expected in the following months. Additionally, the real estate market will likely remain under pressure due to the rise in mortgage rates, economic conditions, or a combination of both.
“Holding the week of April 17, 2025” further showcases the plight of America’s failing economy (keeping the housing market in context). In mortgage news, mortgage rates have reached their all-time high, as home buyers and sellers feel the squeeze today. On the political front, matters such as trade tariffs coupled with political taxes mercilessly put the real estate market and America’s economy in an uncertain position. As things unfold, there is bound to be more changes in mortgage rates and home prices. On the other hand, buyers need to adjust for the increase in uncertainty and be prepared for sudden and rapid projections.
Stay Tuned for More:
GCA Forums is dedicated to tracking the current economic changes and will continuously update our users on the issues that lie ahead. For further updates, check our news feed and subscribe to our newsletter.
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Skylar
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Bailey, my third German Shepherd dog is still skittish. I am going to start working with her next week. Chase my boy is checking out the dog food supply for the month
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Last batch of pictures of Skylar getting trained.
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A few more pictures of Skylar in training in my backyard one on one with me.
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More pictures of Skylar getting trained in my backyard. Chase and Bailey are in the house. Want to train each Germany Shepherd dog one on one.
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Skylar getting trained. Sit, Stay, Come.
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The assertion regarding a Federal Reserve $2 trillion bailout for banks, analogous to World War II-era financial measures, stems from recent reports suggesting the Fed is poised to intervene in a prospective crisis involving the U.S. Treasury market and hedge fund trades. Here is an analysis based on the fragments of information available: Context of the Bailout Claim:
Sources such as ZeroHedge and ITM Trading suggest that the Federal Reserve is preparing for a multi-trillion-dollar intervention due to a collapsing $1.8 trillion hedge fund trade, especially within the Treasury market. Driven by liquidity constraints, margin calls, and a sell-off in Treasuries, which are traditionally considered safe assets, the debt is viewed as being under increased selling pressure. Framed as a response to systemic risk, the proposed bailout aids banks that might be scrambling to offload burdensome government debt. During the WWII financial suffocation of the U.S. economy, banks were forced to buy government bonds to fund the war; similarly, other forms of financial “repression” would be employed in peacetime.
WWII-Era Comparison:
The government implemented policies like financial repression, where U.S. banks were forced to buy government bonds at a low interest rate to help finance war spending. To finance the war. The policies ensured deep liquidity for government spending while suppression kept yields low.
The latest bank dynamics narrative is no different. Due to dwindling foreign demand, the controversy might have commensurate dynamics with banks absorbing Treasury debt.
Note that banks absorbed around 20.7% of Treasury issuance in one of the auctions. Government bail-ins can freeze depositor access to funds, and if this scenario occurs, banks would be perilously exposed should Treasury valuations plummet.
Current Financial Risks:
The $30 trillion Treasury market’s volatility due to hedge fund arbitrage bets rising at $1 trillion alongside reduced liquidity presents dangers. Their collapse presents a cascading risk, where a chaotically unwound trade could lead to a spike in interest rates, increased American borrowing costs, destroyed confidence in the dollar, and triggered hyperinflation. The Fed proposed using emergency market stabilizing measures akin to the $1.6 trillion in Treasuries purchased during the COVID crisis.
Skepticism and Critique:
This illustrative scenario does induce skepticism. However, a lack of dire urgency makes the analysis come from non-mainstream sources such as Zero-Hedge and ITM Trading, which promote alarmist narratives and precious metal investments. While gold bolsters the dark scenarios foreseen by conservatives, the liberal, mainstream markets verify that the Fed takes Trump’s output gap as a new stimulus provision. Bank of America suggests a readiness to act with tariffs triggering immediate liquidity injection responses and crushing gold demand—the speculative $2 trillion needs explaining without the Fed referencing this figure.
While showing the potential for major Federal Reserve interventions, interventionist milestones like the 2008 $700 billion TARP or the 2020 COVID horror response lack clarity regarding details.
Market Perspectives:
If put in action, market-stabilizing balancers could hold markets together, yet run the risk of market flooding and further needlessly ramping up inflation. Critics say it is set to bear most of the consequences and charge taxpayers via bail-ins (once again, it is being touted as bearable because of Dodd-Frank restricting general bank bailouts). Compared to the point of view of the World War II era, the consequences of frivolous spending in this analogy bring fears of a lack of government oversight and reckless spending devaluing the economy in the long term.
The 2 trillion dollar bail aside, without an official statement from the Fed, is neither confirmed nor denied but remains a strong estimate, analysis, and speculation. The treasury market’s relative size opens new avenues to explore and maintain interest. For further discussion, you can look at primary source material like announcements by the Federal Reserve or treasury auction data.
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Here’s a two-column comparison of the nature of mortgage fraud and how each type differs in the perpetrator, the criteria or warning signals used, and the likely punishments. It is not a chart. Using paragraphs simulates one visually and simplifies reading.
Occupancy Fraud
- What It Is: The borrower lies about the primary residence of a property to pay a lower interest rate and down payment.
- Who Commits It? Real estate agents or loan officers might assist the borrower, the primary culprit.
- Criteria & Red Flags: The borrower’s vehicle is not near the property. The borrower has another home nearby, and the income does not sustain both residences.
- Penalties: Defrauding federally insured lenders can lead to loss of loan benefits and civil liabilities. Legal repercussions can extend to payments of up to 10 million dollars or prison sentences of up to 30 years, depending on the length of intent.
Income Fraud
- What It Is: Acts encompass providing altered or unverified documents such as pay stubs and W-2s, or claiming to be self-employed on a loan application.
- Who Commits It: Preparing documents is often outsourced to mortgage brokers, causing borrowers to commit fraud.
- Criteria & Red Flags: Income Too High for the Profession, Where the Employer is Unable to be Verified, Tax Returns Not Matching, Refusal to Provide Bank Statement.
- Penalties: Up to 30 Years in Prison, $1 Million in Fines, and Loss of Their Professional License if a Loan Officer Commits an Offense.
Asset Fraud
What It Is:
- Asserting possession of a greater amount of liquid assets than actually available, more specifically, bank statement assets with fake bank statements or savings accounts, which are just funds that have been borrowed.
Who Commits It:
- Borrowers with or without connivance from the originators.
Criteria & Red Flags:
- Recent large deletions without documented trails, altered financial statements, disparate bank statement balances, and a lack of consistency among finances.
Penalties:
- Civil foreclosure proceedings and wire fraud criminal conspiracy charges, especially if the assets were used to commit mischief to grant a lopsided loan for the unilateral purpose of lending and misleading the lender.
Straw Buyer Schemes
What It Is:
- Using a third party with whom they are familiar and who has a good credit history allows a person who does not qualify for the loan to purchase the house on their behalf. This person usually does not intend to take up the house or repay the loan.
Who Commits It:
- Real estate investors, loan officers, acquaintances, and relatives of unqualified buyers.
Criteria & Red Flags:
- The buyer is not part of the transaction, never sees payments, and immediately transfers title after closing.
Penalties:
- All actors, including the straw purchaser, can be prosecuted for conspiracy, bank fraud, and mail or wire fraud, each carrying a sentence of 30 years in prison.
Appraisal Fraud
What It Is:
- Inflating property values to the appraisal value or higher to obtain a loan or cash out.
Who Commits It:
- Loan officers or borrowers pressure appraisers, real estate agents, and sometimes investors.
Criteria & Red Flags:
- Comps are widely spaced from the subject property.
- The scope of repair or renovations is greatly exaggerated.
- Multiple interested parties employ the appraiser.
Penalties:
- Loss of license is the least severe prison sentence appraisers could face.
- State or federal prosecution can follow since it is part of a broader conspiracy that carries jail time and fines.
Identity Theft / Fraudulent Borrower
What It Is:
- Applying for a mortgage using another person’s identity, social security number, and credit history.
Who Commits It:
- Scammers, organized fraud rings, or people with insider information.
Criteria & Red Flags:
- The borrower cannot answer security questions, ID documents do not match, and discrepancies must be addressed.
Penalties:
- As a federal crime, identity theft carries penalties of 15-30 years imprisonment and restitution with additional sentencing enhancements strictly for identity theft.
Silent Second Mortgage Fraud
What It Is:
- Claiming a borrower’s funds but taking out an undisclosed second loan (sometimes from a seller or private party) to cover the down payment.
Who Gets Away:
- Sellers, mortgage brokers, private lenders, and borrowers.
Circumstances & Warning Signs:
- The Funds are not seasoned, there are unexplained deposits, and a second lien is not disclosed on the closing documents.
Consequences:
- Charged with mortgage fraud, misrepresentation, and violation of regulatory laws.
- In this case, borrowers may be forced to pay back the entire amount upfront.
Foreclosure Rescue/Equity Skimming Scams
What It Is:
- Distressed homeowners are approached and, for a fee, promised help to bypass foreclosure.
- Then, the title is transferred while the equity is skimmed off.
How Do They Get Away With It?
- Fraudulent Investors and sometimes help from unscrupulous attorneys or title agents
Circumstances & Warning Signs:
- Ultimatum to transfer title, no help to avoid foreclosure given, fake “loan modification” companies.
Consequences:
- Targeted vulnerable groups incur harsh penalties during sentencing.
Builder Bailout/Property Flipping Fraud
What It Is:
- Developers and builders normally collude with appraisers and buyers to sell properties in poorly distressed developments at an over-the-top price.
Who Commits It:
- Builders, investors, real estate agents, and appraisers.
Criteria & Red Flags:
- The same parties are repeatedly involved in surpassing normal boundaries and excessive seller incentives.
- Multiple short-interval transactions.
Penalties:
- Criminal convictions, disbarment from federal programs like FHA and VA loans, forfeiture, and fines.
Government Employee or Official Misconduct
What It Is:
- A public official illegally accesses benefits granted through documents, such as mortgage benefits, by lying, e.g., assuming primary residence.
Who Commits It:
- Government employees, former elected officials, or insiders with control of some regulatory access information.
Criteria & Red Flags:
- Undisclosed conflicts of interest, use of position as a bypass for established regulations.
Penalties:
- Office removal, public disqualification, public renovation of administrative punishment outside criminal fraud, and ethics prosecution are often prosecuted under statutory public corruption.
Summary of Penalties:
Restitution:
- Payment to banks or other affected parties.
License Loss:
- Renounce real estate, mortgage, legal, or appraisal license holdings irrevocably.
Reputational Loss:
- Chargeable largely to public or licensed perpetrators.
https://gustancho.com/owner-occupancy-fraud/
gustancho.com
Understanding Owner Occupancy Fraud Mortgage Guidelines
Owner Occupancy fraud is a serious crime and falls under mortgage fraud. A borrower cannot state it is a owner occupied property if it isn't
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