Sometimes we have to take steps backward to go forward again. I believe that this is what is happening to our industries at the moment. The evolution of mortgages went from Conventional and FHA/VA with a few ARM's mixed in to absolute lunacy. A feeling by buyers of entiltement was created. I am alive and breathing so I should be able to get 100% financing to buy a home! This was actually almost true. I know of one loan program that came before the fall, that didn't last long, that almost made this a reality. It was a No Income, No Employment 80/20. It only required a 620 score and two months piti reserve at closing and could be for primary residence or second home. The seller could pay all the closing costs and prepaids. So basically, as an example, you could buy a $250,000 with a 620 score, with no job, as a primary or second home as long as you had about $4000 to $5000 in the bank, a money market, retirement fund, etc. The rates weren't that bad either.
As is true in many things when the pendelum swings it swings wildly from one extreme to the other. So now we have the "credit crunch". so what if you have a 680credit score, 5% down, a good job, money in reserve and want to buy a home? On a conventional product you will have to pay a bit of premium in rate, and you still might not get what you asked for if the house you want is in a "Declining Market" or if there is "Over-supply". I still want to know who determines exactly what "Over Supply" is. Is it three listings, five, ten, 25? So the swing is to just as much lunacy as the swing was the other way.
But things are working their way through this. The reduction by FNMA for the "Declining Market" issue has been removed and I believe that this is just the first in many moves that will gradually get us back to some semblences of common sense. Just as the tide comes in and out there are movements in all phases of the economy, both nationally and worldwide, and we are working through one now. My feeling is that the tide is about ready to come in again and the water to be plentiful for those who have weathered the storm.
There are still programs for 100% financing. They are called FHA with DPA. Also we an go back to the local government agencies that provide down payment assistance. Many of these have been forgotten, but during that time actually improved how they operate, and are now much easier to deal with. There are still many ways to get loans done. It may take a little more work, and knowledge, and effort, but the people still around are the ones who have always done that, are used to it, and will continue to do so (did i mention that I am still around?)
We all need to get back to the feeling of community again. All of us are in this business to make a living, and it is easier to do so if we take the attitude that we are here to help each other. We all need to get back to the future!