Mortgage Brokers Going Down

Posted on August 23, 2007 | by Denny Oh

2004-12-21 Banks squeeze mortgage brokers 226233So Im sure youve been hearing about all the mortgage lenders going out of business and how sub-prime lending is becoming extinct. Well.its true! As interest rates have risen and adjustable rates have, well, adjusted, new home owners are feeling the pain. From around 2000 to 2005, everyone, including myself, was in a rush to buy a home before prices got too high. Many of these homeowners were first time buyers and had little money to put down. This is where the creative lending came into play.

Many people bought their homes with adjustable rate mortgages, or ARMs, and anticipated that their home would appreciate in a few years, giving them the ability to refinance before their variable rates shot through the roof. Now, since the market has shifted and people arent seeing 5“15% appreciation a year, some homeowners are in trouble.

The biggest problem for these homeowners, is that the once plentiful creative lending, is now just a thing of the past. Lending guidelines are much stricter today than they were just 6 months ago. I have clients who cant buy the home they wanted because the loan they qualified for just five weeks ago, no longer exists! In fact, the bank that was going to do the loan doesnt even exist anymore. More and more, I hear stories like this

Well I was going to buy this house I really, really loved, but I waited too long and now there arent any loan programs that I qualify for

As the number of short sales and fore closures rise, the number of mortgage banks will inevitably go down. Even though the amount of these types of sales are low in San Diego, especially when you compare it to the number of new homes that were recently built, they are affecting the market.

So if youre thinking about buying a home and you dont have great credit and you dont have 20% to put down.QUIT WAITING! I promise you, things will not get easier anytime soon. And in case youre curious, heres a list of mortgage banks that have imploded in the last year or so.

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4 Comments

  1. Bob Fortner says:

    I’ve been fielding LOTS of questions and listening to LOTS of concerns from clients here in the Raleigh real estate market about this. I wrote the first installment of a three part series just today to try to get some good solid information out there on what is happening and what has changed. Best I can tell from my mortgage friends, credit score, down payment, and the level of documentation required are very important now.

  2. Great site with super info. Going to bookmark and be back

  3. Very timely data regarding mortgages and what to expect. Thanks for the info. Many people have similar situations in their lives.