Mortgage Advice and Market Conditions

Loan Link · 08-03-2007, 11:42 AM

One piece of advice for all those agents who currenty are working with a lender in their area: If you are in the midst of negotiating a purchase, you may want to check in with the lender because if you are going STATED over 95% you could be in a lot of trouble. Across the board, many lenders are not accepting Alt-A locks – some are accepting no locks at all. Not only that but if you locked in a stated deal that has not already funded, the banks can and will pull it from you!

Here is why:
In a nutshell, the secondary market has “seized up.” The big brokers –Morgan Stanley, Bear Stearns and CSFB, to name a few – are finding it difficult to sell mortgage backed securities at almost any price. Unable to sell the bonds, they in turn cut back or stop buying whole loans.

TBW gave advance notification yesterday that today (8-3-07) they will be “indefinitely suspending” all 2nd mortgage and Alt-A programs, claiming that the “secondary market for these loan programs has completely disappeared in the last 2 days.”

This is definitely going to be tough times for everyone, buyers are going to be even harder to get qualified meaning less homes purchased. I feel that this will change – I expect for the better. Fannie Mae or Freddie Mac may step in to add liquidity. Or the market may stabilize by itself.
I guess we'll just have to wait and see. If you have any questions about these happenings or want advice you can always PM me or just post it up right here.

Dan Connolly · 08-03-2007, 12:23 PM

It's the truth, I had several sales crash and burn in the first subprime shakeup earlier this year. Means there will be more Buyer's agents and Sellers competing for fewer qualified buyers. It will drive a lot of agents out of the business and that is always a good thing.

Ryan Ward · 08-03-2007, 01:59 PM

It's still a bit difficult to see how it will shake out, but, it certainly is the case, as Dan said. Price points that have flourished recently because of the easy money are way down from last year in Atlanta.

Very important to get people qualified before taking them out in today's market...

docmuller · 08-03-2007, 07:20 PM

Something to check into for clients who are having DTI trouble. Wells fargo is currently running a program where they will buy down the clients interest rate a full point for free. I believe it is nation wide, may be worth checking into if you have a DTI challenged client.

Ryan Ward · 08-03-2007, 07:42 PM

The whole point of this fiasco is that buyers have been allowed to overbuy because banks determined the risk of default was low enough to manage. Without the appreciation that homes have seen over the past few years, banks have an increased risk.

I am a real estate agent and we will all see some setback, but, I believe this is for the good of the housing market. Soon, I believe Freddie and Fannie will begin buying more and the fed will move to indicate future rate cuts - probably before the end of the year.

I don't believe that Wells Fargo program is nationwide. Also, if they have DTI problems...Don't you think they should be buying less house?

I believe this goes to the heart of the problem. Buyers believe lenders owe them a loan. That's just insane and it's poor fiscal policy.

BarryC · 08-03-2007, 07:54 PM

That's cool that wells will buy down your rate 1 full point for free..... Although I would be skeptical about that. They have to make their money somewhere.

docmuller · 08-03-2007, 07:59 PM

I wasn't talking about stuffing people into homes they can not afford, my last client could only use the wifes income, even though the husband made plenty of money. The point buydown let them get into their first home, with a lower payment. This is a new couple buying their first home for around $150,000 , not someone I massaged into a $500k McMansion while they worked at McDonalds.

Loan Link · 08-06-2007, 04:20 PM

Quote:

Originally Posted by alpharettaagent

It's still a bit difficult to see how it will shake out, but, it certainly is the case, as Dan said. Price points that have flourished recently because of the easy money are way down from last year in Atlanta.

Very important to get people qualified before taking them out in today's market...

I would even tell all agents in any area, that if they have a Pre-qualified buyer, they need to contact the lender that pre-qualified them and get it done again. The Market has literally changed immensely since I started this thread.

Jumbo Rates are up into the mid 7's (for a Full Doc, 800 Fico 80% LTV Purchase in California). The hardest thing is being able to get borrowers in a loan that they can afford, I predict that you will predominantly see well qualified buyers getting into I/O and Choice Pay Loans in the future. Based only on the fact that borrowers will need lowest payment in anyway shape or form.

Homesurfer · 08-06-2007, 04:32 PM

While most of this is true, the recent secondary market freeze-up is not across the board, but in the sub-prime and Alt-A markets. Mortgage-backed securities based on more main-stream A-paper product will always be around.

As for those talking about Wells Fargo, WF drastically cut back on sub-prime and Alt-A lending several months ago.

Dallas Broker · 08-07-2007, 06:16 PM

The Mortgage industry is taking a hit across the board. All lenders are cautious on who they lend to due to high foreclosure rates nationwide. Year to date, there have been more than 50 lending companies file bankruptcy in Texas. I've had several loan officers contact me this week looking for a job and now wanting to cross the bridge into real estate sales.

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