Michael Tagliere works all over the Southern California area. Including Los Angeles, San Fernando Valley and the Santa Clarita Valley. The Santa Clarita Valley is the location of his office, Vintage Sotheby’s International Realty. The Santa Clarita Valley consists of several unincorporated areas: Valencia, Stevenson Ranch, Westridge, Saugus, Newhall, and Canyon Country.

Over the past couple of months several mortgage companies have been forced to close their doors. Now why is this happening? The major problem has been with subprime lending. Over the past several years buyers would apply for loans through what is called a stated income program. This means they would not have to show documentation as to their income. Obviously, this type of financing was abused by many people. They would obtain 100% financing consisting of an 80% first Trust Deed (TD) and a 20% second TD. These were generally interest only loans with a three to five year due date. In an appreciating market this type of financing will work because if the Santa Clarita Real Estate market is appreciating at a 10%-15% annual rate there would be adequate equity to refinance into a more conforming loan. But, to make things worse many of these loans had negative amortization. In other words, when the loan came due the borrower owed more on the property than when he started. Since values did not appreciate over the past year, and in many cases values declined, when these loans came due the buyers were unable to refinance. These properties could become either short pays, where the lender would accept less than what is owed, or foreclosures. Consequently, we are rapidly getting a glut of properties in that have gone into foreclosure.  As a result, this has had a devastating affect upon the Real Estate market in The Santa Clarita Valley.

This week we were notified that most lenders are not offering 100%, stated loans. You will need at least 5%-10% down with full documentation. What a novel idea!  They have decided to make loans to people that can actually  afford the payments on the loan they are getting. What will they think of next???

I am told that about 1/3 of the first time buyers can actually qualify for a home loan. Not to be discouraged, there are several programs designed to help some of these first time buyers. Our in house lender, GMAC Mortgage, has programs that can help first time buyers with down payment assistance.

Michael V. Tagliere
Managing Partner/Broker
661.219.9110
www.theSCVrealtor.com