The Changing Mortgage Market; A Note To Realtors & Borrowers
Commentary By: Ed Wright - 8/24/07
RE Commentary 102

Important Notice Regarding The Mortgage Market  

In response to changes in the Mortgage Market and the unprecedented liquidity crisis in the Secondary Market, programs we have learned to love over the years are no longer being offered. Simply put, "Creative Loans" (Alt-A Programs) that were available yesterday are probably not around today. TheGood News is the Secondary Market is quickly adjusting to Warehouse Banks and Investors guidelines and bringing out new programs. TheBad News is that these Program changes are occurring daily, and many of the "Creative Programs" familiar to us are gone for the foreseeable future with many changes in the market coming before they may return in one form or another.

The primary changes taking place have to do with credit scores and collateral criteria (i/e: Google “FICO 2008”). The Secondary Market has readjusted credit scores markedly higher on any programs that allow Stated, or variations of Stated Income loans. On average, the minimum acceptable FICO Score to go Stated now is 680 or higher (in the recent past they went as low as a 620 FICO Score).  On the collateral issue they are starting to require a minimum of 5% down, whereas recently no money down was the norm (100% financing). Also program guidelines for “Jumbo Loans,” those loans for amounts over $417,000 have become even more restrictive.

A lot of mortgage companies have, and are presently closing due to these market conditions with many more having a difficult time keeping their doors open, so be especially careful where you refer your clients. Unfortunately, the public is the one being hurt during these difficult times. Customers are getting hit hard with last minute surprises as promised programs are discontinued and the alternatives offered usually have a much higher payment than was anticipated. Many times this higher payment derails the transaction, hurting everyone involved and creating hard feelings.

The best way to avoid these problems is to work with a Mortgage Broker such as Central City Mortgage (in business since 1990, the longest established Mortgage Broker in the Greater Inland Empire). Mortgage Brokers are not limited to one set of underwriting guidelines and usually have many more relationships to secure the Loan Program quoted to your client. Our best solution is to face this difficult market together; I’ve always found that the strongest relationships are those forged in adversity. We’ll be your partner by steering you through these market adjustments.

Please feel free to call upon us at any time if a transaction experiences a last-minute problem with a program change, and we’ll do our best to help get it closed at a payment that will satisfy your client, or better yet… call us before you have a problem.

Ed Wright;  Cell Phone (909) 938-3777

Wright Team Leader;   Central City Mortgage, Inc.

This article was posted by: Ed Wright and Central City Mortgage’s “Wright Team,” specializing in Residential and Commercial Mortgage Lending… Purchase and Refinance. Serving all of California from offices in the Inland Empire. For all your mortgage lending questions please call Ed Wright, “Your Personal Mortgage Consultant For Life” at (909) 938-3777 or E-Mail “The Wright Team:”