Is your Lender in Trouble? How Realtors can Navigate this Crisis

                   With some of these big lenders in trouble could mean we are in trouble. I saw this coming back in  2006 and didn't think it would manifest itself this bad until late 2008.  I forgot that in the information age, bad news travels in nanoseconds.  A crisis, which took 18-36 month two decades ago, is compressed into 18-36 days in the information age.

Four Steps You Can Take Today To Protect a Disruption of Business:

1- Use mortgage brokers or mortgage bankers with access to different correspondent lenders:  ask them to lock with two different lenders - that means no conduits.  If they don't know what conduits are, move on.

2- Pick originators who know what moves the mortgage market and rates - see of they have access to live mortgage bond pricing. If the originator replies that the Fed moves rates or that treasury bonds move rates, or doesn't have access to live mortgage bond quotes, move on.  Make those that claim they have access to live mortgage bond quotes prove it to you.

3- Focus on full documentation buyers.  Insist on seeing the DO or LP findings from the broker or banker if you represent a buyer or seller.

4- Have a last resort back up plan and come up with a other means of financing  Be prepared for programs days before closing be discontinued, lenders days before closing or funding the mortgage halt everything. If you do not prepare for the worse then you will be left with a borrower that can not close and a seller that can not sell. Luckily for the true mortgage professionals out there this mortgage crunch should flood them our of our industry. Too many times I have to hear of horror stories of bait and switch, loans not properly prepared and getting declined days before closing, being lied too and the over stating of income on loans that borrowers should not have been in to begin with.

I am not putting down big lenders, I am just stating a fact that right now it seems the bigger the lender the higher the risk and with higher risk the harder they are falling. I have friends that work for big lenders and they are worried day to day if they still have a job. I hope we do not see anymore lenders go under, this would be nice but something tells me this will get worse before it get's better.

Loans programs that are safe today are government FHA and VA, Fannie Mae and Freddie Mac loans. Anything outside of this subprime or even ALT-A is high risk to guidelines changes with out warning.

If you are working with a client and your approval letter is older than a week, demand a new one. Last thing you or your buyer wants to do is get an offer accepted on a new home and find out after some program changes they do not qualify.

This is a crisis.  Your business doesn't have to suffer if you take the correct actions.