Anyone who has been watching the media withing this last week saw some big changes in the mortgage industry, including the all of a large national mortgage lender - but then again, we all like placing our loans twice, don't we? If we are lucky, we won't have to do it a third time.
You can read about the lender here:
http://www.msnbc.msn.com/id/20144277/
The articles refer to 'liquidity' of the loans, which I thought I would offer a little insight to.
In many cases, lender will transfer a mortgage by selling to another lender. With a non-conforming, or ALT-A loan, these mortgages don't always fit the mold of conventional financing. Myabe the loan amount is too large, it might be an interest only adjustable mortgage or non traditional documentation, llike stated income or no income and asset disclosure.
When these loans are sold to an invester, a 200k mortgage may be bought for 202k. With the increase in foreclosure rates, a liquidity problem has arisen, which means that 200k loan is being bought by the investor for less than the principal amount, like 198k, resulting in a loss for the initial lender.
As a result, rates spike, programs are restructured, and credit and down payment requirements are greater.
For example, I received an email that says they will no longer finance first time home buyers without a minimum of 10% down. In my opinion, this is one extreme and will level out in the future.
Keep watching my blog for updates and please email or post with any questions or comments.
Comments(1)