Real Estate Blog - You Only THINK You Were Approved

On Monday, trading for a American Home Mortgage, a large ALT-A Lender was halted on the floor of the NYSE. The stock was tanking after it's financial backers said they would not continue with their backing. Remember, AHM was not a Sub Prime Lender, they were primarily ALT-A.

I have personally never done a loan through AHM. It looks like I never will. But here's the really scary part. email2

Every Lender is scrambling. No matter if it's the biggest (Countrywide) or the smallest, no matter if they do only the highest quality A Paper loans. They are all scrambling right now. They are tightening guidelines, deleting programs and making WILD adjustments all in an effort to make sure they are the "prettiest one at the dance".

We're talking all the big girls. And who are they? According to Inside Mortgage Finance

, the top 10 list for originators for the first half of 2007 are

It reminds me of a Backpacking quote I always liked, "When you suddenly come face to face with an angry Grizzly, remember you don't have to run faster than the bear, just faster than your buddy!"

Tuesday, Wednesday, and Thursday this week, every lender sent flurries of emails and faxes out to their brokers and loan originators. Every Lender.

They deleted this, they modified that. What was ok yesterday is no longer ok today. Even from this morning to this afternoon.

I can fund loans through all the big lenders and so many more little lenders. At one point I had over 7,000 loan programs at my disposal. While a Mortgage Banker has certain advantages at times, right now, at this point in time, with the volatility in the marketplace as it is, I thank my lucky stars I have the flexibility when a door slams shut (as so many have closed this week), to switch lenders and find a still open door.

It may be just my personal opinion, but if you are not working with a Professional Mortgage Broker today, you may be in for a big disappointment tomorrow. The sad part is that I know so many wonderful, ethical, professional Mortgage Bankers who may get caught up in all this, and it has nothing to do with them or their company. It's the financial backers of that company that they are all scrambling for. The losers will be the borrowers as well as the professional mortgage originators working for that company.

Here's Gretchen Morgenson (a Pulitzer Prize NY Times Author) explaining the relationships between Lenders and the "backers". While they are talking about Sub Prime, the same relationships apply. You can read more about it here: Asking the Question

Part Two:

Friday Update: One of my favorite Account Executives just sent me this:

"Let me start this e-mail by saying that I realize that many of you are getting an overload of information from your lenders right now as the landscape seems to be changing faster than we can all keep up with, but I do want to make sure that you are very well informed on changes here at xxxx. That said, please review the following information and attachments as we have made more than a few guideline changes. Most of the changes seem to be tightening up on lower credit scores at higher LTV's and stated income programs..... based on recent changes in the industry, not a huge surprise. What seems to be good news to me thus far is that we are actually keeping a majority of the programs that we offer.

What's also good news is that we are an integral part of xxxc, so we are not going anywhere. That said, going forward, it will be business as usual for us, as long as what is being submitted is meeting the guidelines. If there is anything that you may have a question about, I will do my best to properly address it.

Thank you all for your time in reviewing this information and I will continue to communicate what I get from my corporate office as soon as I get it."

That's a good salesman putting a positive spin on a very scary situation. And yes, he's from one of the top 10.

Here's a different spin coming from a Lender directly