Mortgage tightening... even in Seattle

The_Tim

Some interesting quotes over at RCG today:

Rhonda Porter wrote:

Greenpoint Mortgage is not a subprime lender. 80/20s are still available for borrowers with better credit, this is the first time I've been aware of a non-subprime lender pulling out of this segment of the market.

Bill Waters wrote:

I saw another broker mention that he lost 2 subprime loan programs this afternoon because Merril Lynch announced today that they were no longer purchasing any more subprime loans - period (that seems a little drastic)

What i'm wondering about is for the past few weeks most mortgage brokers I've spoken to or that blog about their business have said there was some urgency to get people qualified this month before the programs dried up.

Rhonda Porter wrote:

Yes I have. However, even if people rush to get qualified, they'll have to rush to close before the program is stopped. It's a real feeling of panic for buyers.

Very interesting...

biliruben

Yeah, I heard about the demise of 80/20s over on Calculated Risk.

Interesting that Rhonda doesn't think it would effect the latest pendings. I don't know how it wouldn't.

ayles

Rhonda Porter wrote:

Ardell,
I'm worried sick for the people who will need to refi out of their short term fixed rate mortgages when they adjust. I'm afraid if they have not taken steps to improve their credit that they will be forced to sell or be foreclosed on. With the adjustments on the subprime arm/balloons, these home owners will not be able to afford their new payments. I'm a worrier by nature...but I don't think I'm under-estimating this.

I've been talking this situation up to the agents I work with. I want them to understand why the same client they brought me last week no longer is can buy. They seem pretty surprised overall.

Last night, I had to contact a borrower (and agent) to tell them the good faith estimate I had provided to them that afternoon was no longer valid. I have NEVER had to do that before. This borrower had a mid score of 750, however it was an 80/20 that only Greenpoint Mortgage could do. And now, they're out of the 80/20 biz.

Did she really say that she was worried sick? The tone has really taken a dramatic turn over at the rain city guide...

S-Crow

We've had an APB on our website main page FOR WEEKS and sent out warnings to all the real estate professionals we work with regarding the lender failures and tightening of credit and it's impact on transactions. It is unfortunate along the entire real estate food chain where transactions are affected, but I've been saying for months and months and months, this (lending and sales environment) is going to unwind in a very dislocated and 'hard landing ' manner.

I'm certain that executives of major real estate brokerages have to be thinking that the timing of the lender tightening and sub-prime collapse (lets not mince words here, it is what it is) couldn't have been worse with the prime selling season at our doorstep.

Those who have been in the business for only a few years are going to experience what it's like to actually have to work for a living, particularly in lending. Many have never known what a correction does to your bottom line. This correction will be different than that earlier.

No, the sky is not falling and no the world is not coming to an ending. No, but the real estate world is being rocked for many. Tell that to the borrowers in the midst of a refinance who's loan just got rejected or those in the middle of a purchase who's lender never funded the loan.

Not alarmist, just personally prepared. Kind of like what we are supposed to do if our country or communities are impacted by a natural or terrorist disaster.