Signature RM Blog

The purpose of this communication is not to alarm you but to alert you to drastic and irreversible changes currently taking place in the mortgage market. If you or anyone else you know will need mortgage financing in the next 18 months, you need to read this!

Like many mortgage companies, American Home Mortgage and its wholesale counterpart, American Brokers Conduit, became a casualties of the credit crisis. Last year, this company closed over $58 billion in home loans. Despite being, by all accounts, a well-run business, market conditions forced them to file for bankruptcy, leaving billions of dollars in loans in their pipeline unable to close. Tens of thousands of borrowers have now been left without financing as a result of companies like this going under.

Clearly, with over 100 national lenders having now closed shop in the last eight months, this is no longer simply a subprime lending issue. The credit market is experiencing unprecedented turmoil. According to Federal Reserve Chairman, Ben Bernanke, "Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing."

What does this mean to consumers?

Potential borrowers cannot wait any longer. For those who are considering buying a home, be aware that the volatile credit market can change overnight, leaving fewer options available to borrowers attempting to qualify for a mortgage. This is even more true for those looking to refinance. With decreases in home values and fewer available mortgage instruments, delaying any longer could get significantly more expensive.

Borrowers with applications in process must not delay. Applicants should work with their mortgage professional to complete all paperwork quickly, especially on non-conforming, stated-income, and stated-asset loans. Even minor delays can result in funds being yanked at the closing table!

Sellers can no longer be reluctant to accept offers or reduce prices. Tightening credit and diminishing mortgage products will continue to reduce the pool of qualified buyers. This, along with the increase in national housing inventories, means now is not the time to hold out for the "best" price possible.

Buyers with credit issues or who have difficulty providing required documentation can no longer sit on the fence. If market conditions change, buyers who qualify for a loan today may not qualify a few weeks from now for the same exact loan. Just this week, many lenders have stopped offering No-Doc loans, and some lenders have even pulled back on all forms of stated loans. As market conditions continue to change, a buyer's pre-approval status can disappear even more quickly, delaying or spoiling the deal.

Subprime and Alt-A refi candidates, especially those with ARMs scheduled to reset over the next 12 months, need to act now - even those with a pre-payment penalty. ARMs borrowers struggling with monthly payments now might be shocked to know that monthly payments can double in some cases once an ARM resets.

What does this mean to you?

If you or someone you know has an ongoing real estate transaction, I would be glad to help. Please call me right away. As an educated mortgage professional, I will utilize my experience and resources to help you and your loved ones to navigate through these turbulent times. Don't leave your future in the hands of some random mortgage provider. I'm local, accountable, and you can trust that I'll do everything in my power to help you succeed.

Milo Loop

Is it a Trick or a Treat that the Federal Reserve once again cut the interest rate on Halloween.

That's right! They have done it again. The cut was for a quarter of a point, bringing the fed funds rate to 4.50%, citing housing concerns.

Full Story:

http://money.cnn.com/2007/10/31/news/economy/fed_rates/index.htm?postversion=2007103114

With the ability to get easy money nearly gone. Here are a few things you must know.

1. Mortgages - The days of subprime mortgages are headed for extinction.  Especially those loans requiring no proof of income.  According to the Federal Reserve one in seven banks have tighten their underwriting standards.  This includes all Mortgage products from Good Credit to subprime.  The days of 100% mortgage financing have pretty much gone out the window.  The products are still our there, but the amount of hoops that you must jump through will make it very difficult.  If you have an adjustable rate mortgage and your rate will be higher than 7.25%, now is the time to refinance your mortgage.

2. Home Equity Loans - The ability to get a home equity loan (HELOC) has diminished along with the the ability to obtain a mortgage. The days of 100% equity lines have vanished.  Most companies are not lending money over 80% of the equity of your home.  If you need a HELOC loan you may be better off just doing a first mortgage and pulling out the extra cash you need.

3. Credit Cards - Banks are looking to make up their losses through Credit Cards.  They have increased the rates and have increased the fees associated with the cards.  Now is not the time to be paying your credit cards late.

4. Auto Loans - The auto industry does not seem to be hurt by the credit crunch at this time. Now the purchase of new cars is a different story and we will save that for another time.

With all this information is hard to figure out what really is best.  If you would like an analysis of what is best for you feel free to contact me and we discuss you situation.

The Dow has currently at an all-time intra-day High. I think Wall Street might be expecting another Rate cut, which maybe what is fueling the surge in the stock market. 

If you have a rate over 7% now is the time to refinance. If you have an ARM mortgage do not delay. In this complex credit market you will want to put yourself into a stabile mortgage product.  Call today! I can help determine the best product for you situation.