More Program Changes in the Mortgage Industry...

Mortgage and Lending with The best place EVER!

Just a recap of what's changing this past week.  If you have some deals going on, these changes could affect you.

Bear Stearns changed their product offerings on Friday. They suspended "No Ratio", NIVA, and "No Doc", all second home and investment loans, and their "No MI" programs.

Citi (at the risk of possibly repeating myself) is discontinuing the following programs: for Prime Lending, NIVA & NINA for Non-Agency Alt A, "Home on Time" (I guess they're going to be late...), and CRA Stated Income. Under the Expanded Lending (Non-Prime), they've discontinued Expanded Lending First Lien Stated Income Documentation Process and Expanded Lending Second Lien Programs.

Countrywide made several guideline changes, effective today. For their HELOC's they reduced the CLTV's and loan amounts, and increased minimum credit scores. Along the same lines, for their Fast & Easy, Non-conforming, Expanded, and Alt-A programs, changes included reductions in LTV and CLTV, and increases in credit scores.

Nat City Correspondent Lending has suspended all new registrations and locks under both the Standard and Select Extended Capped Rate programs until further notice.

RFC's warehouse bank is rumored to be making changes to their advance rates on 2nd liens and pay option loans to investors besides GMAC/RFC, lowering them to as low as 50%.

Wells Fargo Home Equity Today is the LAST DAY that Stated Income Stated Asset transactions can be submitted to Wells Fargo Home Equity, and they must close and fund within 60 days.  They will still be offering Stated Income Verified Asset up to 90%.

On Friday, Impac Mortgage pre-announced a loss of $152.5 million, and that filing of its 2Q07 10-Q has been delayed as a result of "recent volatility and disruptions in the mortgage and secondary markets and integration and analysis of the financial information from its May 2007 acquisition of certain assets and liabilities".

On Friday, the liquidity crunch intensified with the 1-week LIBOR reaching levels as high as 6.0%. The European Central Bank made a second loan to banks to alleviate a money shortage sparked by concerns over investments in U.S. mortgages. The ECB injected another $83 billion, and the Fed added $38 billion, the most since September 2001. The Federal Reserve added $19, $16, and $3 billion in temporary funds to the banking system through the purchase of mortgage-backed securities to help meet demand for cash amid a rout in bonds backed by home loans to riskier borrowers. It added this money through the purchase of securities, including mortgage-backed debt to meet the demand for cash. The New York Fed's additions lowered the Federal funds rate to 5.375%, after it began trading at 6%, the highest opening rate since January 2001. The Fed's benchmark overnight rate is currently 5.25%. Fed funds traded above the central bank's target for a second straight day. Speculation continues that the Fed will ease rates; the market is now discounting almost a 100% chance of a 25 basis point cut to 5% at the next FOMC meeting on Sept. 18. 

It's important to keep in mind the Fed is providing liquidity on Agency (GNMA, FNMA, FGLMC) MBS collateral, not on the non-Agency subprime, whole loan, Alt-A product.  Funding non-Agency securities will still be a problem, and all lenders across the economy are pulling back, saying "no", raising haircuts and rates. OFHEO just issued a statement rejecting raising the portfolio cap as of now. They say that they closely monitor the mortgage market and will keep the portfolio issue under active consideration.


Comments (4)

Mark Lomas
Santa Barbara Real Estate - Santa Barbara, CA
Experience You Can Count On!

Hey Tony,

      Good post!  Have something similar but a little different  (2nd post down) on

 Good luck out there!,



Aug 13, 2007 02:49 AM
Tony D. Howell
The best place EVER! - Wilmington, NC
Thanks Mark, I saw your blog post just a few minutes ago and already commented on it.  Good stuff!
Aug 13, 2007 03:08 AM
Bruce Bourgault, Vice President, Mpro
Central Pacific Homeloans - Honolulu, HI
Hi Tony -- Thanks for the summation.  Great recap of where we are now. Aloha
Aug 13, 2007 03:11 AM
Candy Henthorne
Results Realty - Spring, TX
Spring Texas Real Estate
I always appreciate helpful information.  This is good information to know with the new changes.
Aug 13, 2007 03:33 AM