John Paulson, the man who made billions of dollars of the recent financial meltdown, is now encouraging a practice he once shorted for immense personal gain ($3.7B salary in 2007). While many dispute the integrity of someone keeping mum while anticipating a tsunamic meltdown, he is undeniably smart and in tune with the mortgage market, one of the biggest areas he focused on.
Recently, he was quoted in a Forbes article –
As this is the best time in 50 years to buy homes, Paulson advised his listeners, to issue 30 year mortgages to buy a home as “your debt and interest payments get locked in at record lows, while the price of your home will rise.”
“If you don’t own a home buy one,” Paulson recommended; ” if you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”
He’s right. The market is widely considered at or near the bottom (though we aren’t expecting a meteoric rise any time soon). But since the United States is one of the few countries that has 30 year mortgages, it is tough to find a way to owe so little interest and pay so little each month (the American dream of course).
And maybe he’s promoting it to be on mortgage-backed securities on the way up? given the stringent requirements these days to get a mortgage, I wouldn’t be surprised if the quality of bundles is vastly improved, and someone willing to take that stand in a field riddled with doubt could stand to make some extra loot.
This Braswellian Life 
Posted on October 26, 2010
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