I was at an agent's breakfast sponsored by my firm, Long & Foster Real Estate this morning down in Maryland. A corporate exec showed me this article he had printed off from the Washington Post. In fact, there are articles all
over the web in the mortgage world, some of which I've linked below.
Folks, things are about to get ugly. With the overnight demise of American Home Mortgage, who filed this morning for bankruptcy, an industry-wide pullback has been initiated. With the rapidly-declining market for mortgage-backed securities tied to subprime and Alt-A loans, top lenders are revising policies and raising rates. Apparently some high-level meetings are happening this morning west-coast time which will affect big lenders like Countrywide and National City. Some observations from an industry insider who commented this morning:
- Jumbo loan (over $417,000 in Lancaster) rates are going up 5/8 of a point within a week, across the board.
- 100% financing programs are going away. If your mortgage broker says they can do one after a few more weeks, don't believe it.
- Stated Income programs are going away. Risk reduction is the new buzzword.
- Stand-alone second mortgages are going away. "80/20" arrangements...More risk reduction.
Our advice at this morning's meeting was to get any and all mortgage rate commitments in writing, verifying the actual lender if you are working with a broker. If you are on the fence about buying, don't wait! Everything is going to get much harder in the weeks and months to come. For realtors, time to pull out the contact list and get calling. Your clients will thank you later (especially if their loan is likely to be a jumbo one). You can contact our Lancaster mortgage expert Dan McCormac for more info, too.
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For Lancaster PA homes for sale click here. Jeff Geoghan is a top real estate expert in Lancaster County, PA, and an involved community member. Jeff's work has been featured in the Lancaster Newspapers, WGAL Channel 8, PA Business Journal and Wall Street Journal. Jeff's blog on Lancaster County and its homes is nationally-featured. Contact Jeff for more help with your Lancaster PA Real Estate needs.
Jeff~
It's good to be aware of the twists and turns on the road...and this post sure is appreciated.
Jeff - Good post with timely information. Keep in mind as Shailesh pointed out - even in writing things can change over night in this lending environment. Best bet is to have a good broker who will advise and be on the lookout for the best program!
Jeff:
With respect to the 'expert", 100% programs are being expanded. Freddie sent a message out to all the major conforming lenders that it's product is available, liquid, and promotable.
Stand alon seconds aren't going anywhere. The HELOC product is too successful. CLTVs may be cut a tad but it won't disappear.
Remember, lenders lend. When they cease to lend, they cease being lenders. This too shall pass.
Jeff:
Fannie and Freddie just sent out e-mails expanding the 100% program. Just make sure they're full doc and you'll be okay. HUD is lobbying Congress to do away with the statutory 3% downpayment.
Jeff, I've been warning buyers since this started. Every week someone says stop sending homes, I can't ger financed, my spouse may be transferred, companies laying off, etc...
I agree lenders lend!