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Alt-A No Longer Offered! (With These Lenders, Anyway)

I just received notifcation that Taylor, Bean & Whitaker, a conforming & Alt-A lender, has completely removed all Alt-A programs and 2nd liens from their product line.

In addition, Homecoming Financial has removed all Alt-A products with credit scores below 660.

Finally, First Magnus Financial has suspended all locks on Jumbo loans, and has pulled its Niche Advantage and Evolution products (which are Alt-A type programs).

It appears that the plug has been pulled. I assume that many other Alt-A lenders will follow suit. I've already heard that IndyMac is struggling (see http://www.ml-implode.com). This is going to get a lot worse before it gets better!

The borrower who truly needs the stated income/no ratio/no doc products is in trouble! I'm speaking, of course, of the self-employed borrower who pays their bills on time and has every intention of continuing to do so. Wage earner stated income loans should have been discontinued long before they were.

My advice is to hang in there - it will get rocky, but it (should) get better!

Posted by Gareth Bourriague - Benchmark Mortgage on 08/03/2007 10:43 AM

Comments (2)

alta, stated income, no doc, no ratio, mortgage crisis

2 Comments on Alt-A No Longer Offered! (With These Lenders, Anyway)

AUG

2007

Gareth,

Wells, Wachovia, IndyMac, and a host of others have also pulled out of ALT-A this week. In Sub-Prime, Accredited and Fieldstone stopped taking applications, and BNC is in some sort of "re-structuring". That last one pains me as I used to be an AE there and have many friends caught up in it.

I got an email this week from an insider at a major ALT-A bank:

"Merrill, Bear, Lehman, DB etc are having most, if not all, warehouse lines issued to middle market mortgage bankers completely terminated or forced to give up haircuts to the tune of 30-50%.

Anyone who is NOT a bank lending depositors money and relies on warehouse capacity are being called in this week. The securitization party is over. The Wall St Banks/Conduits do not want any more new paper from their originators. They never wanted 30 yr fixed jumbo loans at 7% anyway. They wanted the securitization fees.

Now, the world is awash in mortgage debt. A good friend went to market with $50 mil in less than 80% LTV 5/1 Full-am and Int Only paper with an average fico above 700 and it came back NO BID.

No loans are selling - the mortgage banking machine has shut down folks.

Essentially the maximum loan amount in America tonight is the Fannie/Freddie SFR max of $417,000. No loans, other than agency, are being sold."

Pretty sobering.

Thanks for the comment, Tom. It is sobering!

My wife is an AE for First Magnus. She chose them as a "safe haven" when she lost her AE position with New Century when they shut down. Now, there's nowhere to run! =)

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