it is certainly raining cats and dogs... 
Of course, as
we are all aware, these days... it is in deed a Buyer's Market. That has
been abundantly clear and demonstrated by the conclusion of negotiations for
the property after property across the USA. That continues to be the case,
and... even in this Buyer's Market, the mortgage industry continues to be
pummeled by changing terms and conditions of loan products.
On Thursday,
December 6th 2008, FlagStar Bank, one of the nations largest lenders put out
a list of states and communities with those states that are identified as
"Declining Markets". California was
perhaps the hardest hit with nearly 1/5 of its counties the target of the
FlagStar Bank decision. Other states that have been put on the
"Declining Market" watch
list and that have been hard hit by the additional lending restrictions are,
Colorado, Florida, Michigan, Ohio, Virginia and several other states to a
lesser degree.
Fortunately,
Arizona has not been identified as being in a
"Declining Market" ...YET...,
but with changes noted above, one could say that the mortgage industry is a
tinder box of change with volatility unparallel since the late 1980s. It
could be argued that the memo from FlagStar Bank is a signal from Fannie-Mae
and Freddie-Mac, that Fannie-Mae and Freddie-Mac are throwing in the towel,
and... figuratively saying... "...we're
going to distance ourselves, as best that we can, from any borrower who does
not have a substantial investment in their purchase..."
Those buyers
who use good judgment and act quickly will preserve the best of what is
available to them today, in terms of loan product and costs for these loan
products. However, buyer's who dilly-dally and want to become "fledgling
bond traders", rolling the dice on where interest rates and loan costs
land, may well find themselves locked in loan products that are unappealing.
Of course, buyers with
credit profiles in the upper 700 FICO range, and above, will fit into
nearly any of the loan platforms that remain viable options for mortgage
consideration. Therefore the decisions and
demography noted in the FlagStar Bank memo do not directly impact these
borrowers or their loans YET! However, that does not mean that this pool of
buyers don't have to be proactive in taking appropriately expeditious steps
to protect the loan products that are available to them TODAY. Working with
a lender, such as
Pacific
Funding Group or
Coldwell Banker Home Loans, puts any buyer in the Cat-Bird's chair. Other lenders
who are trolling the Internet in search of buyers who are less informed will
try to bait the buyers with promises of loan products that are simply not
attainable. (SIDE BAR: Visit
RealEstateInPhoenix.net for access to all types of mortgage calculators)
If you have
been watching the mortgage market, you know that it has been on a roller
coaster. On Monday, December 3rd 2008, one of our clients locked an
interest rate on a 30 year fixed loan at 5.75 with .125% point. Twenty four
(24) hours later, that rate and terms has evaporated and is no longer
available. On December 6th 2007 the 30 fixed rate was back up to
6.375. The BOND market will most certainly spin out of control over the
next few days with the news that FlagStar Bank has taken steps to identify
nearly 1/5 of the USA as being in a "Declining
Market"; and again, fortunately Arizona has not made the
Hit List yet. And... as we noted
above, while the move by FlagStar Bank would not directly impact the loans
for buyers with better than good FICO scores, this will impact the type of
loans available to the majority of the public as other major lenders adopt
similar strategies.
After being in
this industry for nearly two decades and having survived similar market
conditions, it is our belief that many of the other big players in the
mortgage industry will follow FlagStar Bank's move with in the next 15 to 30
days; industry mortgage leaders like Countrywide Home Loans, IndyMac Home
Loans, Well Fargo, Bank of America and many others. We have already heard
from the Vice President of Coldwell Banker Home Loans today... that Coldwell
Banker Home Loans is bracing for even more tightening of mortgage lending
parameters over the next few weeks. Today is a GREAT day to be a buyer and
an even better day to be a buyer who can make prompt and decisive decisions
about their loan platform.
Even though the
FED spoke on December 11th 2007 and lower interest rates again by 250 basis
points, any movement that was made by the FED will most likely not impact new loans for
many months, if at all. These rate reductions are designed to help the
wholesale market, the guys/banks who buy money from the FED at the
"Discount Window". These types of rate
reductions are not designed to help consumers who are profiling new loans.
Lori and I have been in this industry a very long time.
We have seen markets similar to this on three prior occasions, however none
where course corrections or changes in direction were so rapid. We believe
that the rapid course corrections to real estate and mortgage market
dynamics are directly related to the speed that information travels at
today. Today we have the Internet, in the 1980s, only the military had the
Internet, or a very elementary semblance of an Internet. Today, good news
as well as bad news travels at lightning speed. The rapid movement of news,
good or bad, impacts all industries, but none more dramatically than the
Stock and Bond market and Real Estate and Mortgage industry.
If you would like to receive a FREE analysis of
the real estate market in the area you are going to purchase your home
CLICK THIS LINK.
If you would like to receive a FREE analysis of
the real estate market in the area where your current home is located
CLICK THIS LINK.
We wish you and your family a very prosperous
closing of 2007 and a happy and healthy new 2008.
;)
;)
