Mortgage Mess Hits the Stock Market

Today, American Home Mortgage closed its doors and released 7000 employees. They are out of business.

We will see more fall out, especially as many hedge funds lent money to lenders to underwrite these mortgages.

We have buyers who got loans in the past few years with 100% NO MONEY DOWN as the enticement. Some of those buyers didn't understand that the mortgage would adjust UP while the value of their homes went DOWN.

With the downgrade of Bear Stearns today, it becomes clear that this credit problem is going to infect most businesses and by extension, most of us.

My friend Cramer says that many recent buyers should just turn in their house keys to their lenders. Can you imagine? Millions of empty homes...and lenders unable to resell them. Not a pleasant picture.

In fact, at this morning's closing, the loan officer said that she'd been told this week to only do 30 year fixed mortgages and FHA. And, if you've never done an FHA loan...it's time to learn! And, also rentals. You'll need to help these people into affordable rentals.

It's going to be a rocky few months...but, when all is said and done, those lenders left standing at the end of the year will be the ones who will be getting my business. Right now: CASH is king.

 

7 Comments on Mortgage Mess Hits the Stock Market

and the King has left the building!  LOL

 

08/03/2007 05:32 PM by Louis Cheek Jr

Louie, Louie, Louie,

All three of you. So, where are you hiding that money?

08/03/2007 05:42 PM by Eileen Landau, ABR, CRS, e-PRO (Realty Executives, REALTORS)

I have a listing that is supposed to settle next week on the 7th. The contract was negotiated in April. I flipped out when I remembered the lender was American Home Mortgage. There was no need to worry though - The loan officer was great and had already switched the buyers loan, with the same terms to FNMC, a good lender that I am familiar with.  WOW that was a close one!  I have already heard a couple horror stories about people that settled last friday and the loans were not funded on Monday.  YIKES

08/03/2007 05:48 PM by Debbie Cook (Long & Foster Real Estate, Inc)

It's all in my pocket.....I put my hand in there now and then and jingle it around to make sure it's still there. 

08/03/2007 06:09 PM by Louis Cheek Jr

If  you have a mortgage with them and they close does that mean you no longer owe any money? :-)

08/04/2007 12:43 AM by Carole Cohen (Howard Hanna Cleveland City Office)

Carole,

You dreamer! I suspect if you read your mortgage papers, somewhere in there it says that should the lender no longer be in business then you'll be sending your monthly payment to another lender.

I'd expect two things: 1) they may have just been servicing or originating the loans and 2) any loans on their books will now go to a new servicer/provider/lender.

Expect to get an official letter directly you to mail your payments. And, should you just be a creature of habit, I'm guessing that those checks would be cashed and used.

08/04/2007 08:11 PM by Eileen Landau, ABR, CRS, e-PRO (Realty Executives, REALTORS)

OH I'm sure you are right but I like my idea better lol.  Funny, one time I sent electric co check to gas company; I found out because amounts were not correct; of course both of them cashed them anyway lol

08/04/2007 08:16 PM by Carole Cohen (Howard Hanna Cleveland City Office)

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Real Estate Agent: Eileen Landau, ABR, CRS, e-PRO (Realty Executives, REALTORS)
Eileen Landau, ABR, CRS, e-PRO
Naperville, IL
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