Mortgage companies in trouble (loan officer, real estate, approved, foreclosures)

[Grass Is Greener]

I was talking to a lender and things seem to be going VERY wrong... It looks like BIG trouble ahead. People can't close because their (supposedly) mortgage company is going belly up, rates are going UP, etc. etc. Is that the doomsday? The big crash? yikes.

[TimtheGuy]

Another reason to use a VERY REPUTABLE LENDER!

Not doomsday however, It may actually good to have a little "cleansing" of the weaker/shadier lenders out there.

The bottom 10%+ of borrowers (subprime) probably should not have been buying homes to start with. Otherwise there is still plenty of money to be had for decent borrowers. 100% financing at that. So, not the big crash but it will certainly add time to the recovery period.

Definitely going to be a plus for the landlords out there as the rental pool will be stronger.

[TimtheGuy]

Originally Posted by Grass Is Greener

I was talking to a lender and things seem to be going VERY wrong... It looks like BIG trouble ahead. People can't close because their (supposedly) mortgage company is going belly up, rates are going UP, etc. etc. Is that the doomsday? The big crash? yikes.

...and rates are actually pretty stable at this time. A 30 year fixed is around 6.5%. So, rates are still very attractive!

[UseJeff]

Unfortunately "very reputable lenders" are quite susceptible to going belly up as well. One of last years top 10 is just about to close it's doors... I know of a few subprime big boys that are years old that are closing offices and consolidating... The big banks who do stuff other than mortgage, and the companies deep into the servicing profit are the only ones I would consider completely safe from closing.

Basically the subprime market is become much more strict, with much higher rates. The Alt-A creative program market is taking hits with rate increases as well. If you don't have great credit, with some good equity, it's very likely you won't benefit from a new loan, even if your current loan has hit it's nasty adjustable period.

There's going to be a lot more foreclosures over the next year, which should drive down houses more, or at the very least stop any increase in value.

[DavidS827]

Originally Posted by UseJeff

One of last years top 10 is just about to close it's doors...

I have a feeling that we will see more of the lenders that implemented CDU, or another proprietary AUS, into their operations over the last 4-6 years go down in flames. Some of the loans that I saw get approved are just unreal.

[UseJeff]

This was an interesting link to check out that this user posted in a different thread...

Originally Posted by FarNorthDallas

Here's a list of lenders that have gone belly up. It's towards the bottom.

Bloomberg.com: Investment Tools

[TimtheGuy]

Here is a good article on the Alt-A and subprime paper being basically unsaleable at this time: Home Borrowing Costs May Soar Amid Crunch (Chief Consolidated Mining Co. (CFC), Fannie Mae (FNM), Freddie Mac (FRE), Morgan Stanley Insured Municipal Bond Trust (IMB), (US313400)) | SmartMoney.com

I am glad that 99% of my business is A-paper and saleable to Fannie, Freddie & Ginnie. I can do Alt-A and subprime, but I never liked it much.

I work at a small community bank, but basically in a broker role (corrspondent lender). Most of the loans I do are sold to US Bank, Countrywide and CitiMortgage. Like Jeff said these companies aren't going anywhere.

[UseJeff]

I'm moving marketing away from possible subprime clients quickly. My biggest problem now is the conforming loan limit of $417K. So many homes here have bigger loan amounts than that... alot of lenders are no longer taking the approve/ineligible and just using Fannies guidelines.

I think I'm just going to go stand on a corner with one of those dancing arrow signs. On the sign it will read "Amazing Credit? Great Equity? Loan Amount less than $417,000? Call now!"

(For those who think I've gone daffy... it's commonplace here to see local businesses advertise using humans on corners with big signs. They dance around and spin them to get your attention)

[zee909]

Okay, so it would seem that banks/lenders are sitting on a whole lot of real estate and their pile is growing. What's going to happen with all those foreclosed homes? We haven't heard anything from the lenders yet about their plans for all that inventory.

[Pimpy]

I'm happy that rip-off companies like Ameriquest and New Century that were making 4-5 points per deal are going belly up. Like Justin "The New Michael Jackson" Timberlake said, "What goes around comes back around."

Always shop the heck out of these mortgage companies until you find a loan officer willing to do your deal for one point -- or LESS if your loan amount is over $250,000.

Just a friendly tip from an unbiased mortgage guru that isn't involved in this business and wants nothing to do with it.