Subprime Meltdown isn't affecting "conforming" and government loans

Mortgage and Lending with Delta Trust Mortgage

With all the negative press about the mortgage industry, it is hard to believe that some, if not most, of the available mortgage programs are experiencing a decline in rates.  That is, a decline that is relative to where rates we 30,60, or even 90 days ago.

While some wholesale lenders are experiencing a liquidity issue, there is plenty of money that is available in general and this turmoil has created a "flight to quality" in terms of investors looking for a place to park funds.  With that being said, those loans that have either the guarantee of the US government (in case of default) or have implied government backing have actually benefited from the mortgage mess.  The beneficiaries of this mindset are those individuals that borrow using FHA or VA programs or who borrow within the FNMA or FHLMC conforming loan limit.

We, as an industry, will see many of the "easy money, nothing down" program simply disappear.  The consumer and/or Realtor will be well served to keep up with or re-learn the FHA and VA programs.  Familiarity with the "My Community Mortgage" program could help you with many first time borrowers that would have otherwise gone with a high LTV program.

Your local EXPERIENCED in state or local lender will be able to guide you through these turbulent times. If they can't be reached, contact me and I'll help.  With many lenders joining the mortgage ranks since the boom of a few years ago, there are many that have never experienced an unstable market.  Just be careful of who is supplying you the answers to the questions you may have.  As we have seen in the mortgage business, the quality of product is equal to the quality of the vendor!

Comments (6)

Alan Barker
Boomerang Leads - Smithfield, UT

When you say a "decline in rates" do you mean the amount of mortgage applicants, or the actual interest rates. What do you think will happen to interest rates for full doc, good credit borrowers in the near future?

Logan Utah Real Estate 

Aug 23, 2007 09:00 AM
Provadus Home Loans
Provadus Home Loans - Marietta, GA
Technology bringing you home.
The actual rates are declining.  The negative press on the market & bond markets are not doing well, in turn, lowers rates.  The full doc, good credit (620 +) loans will be fine.  Conventional loans (5% down) will be much better priced than 100% financing. 
Aug 23, 2007 09:18 AM
Claude Cousins
Delta Trust Mortgage - Little Rock, AR

"Decline in Rates" refers to the actual loan rate themselves.  When mortgage backed securities (MBS)appreciate in price the actual loan rates decline.  It seem to be contrary that "sub-prime" rates are in a world of hurt and MBS are more valuable but that is how it has been lately.

Given that this industry has never seen liquidity issues like this ( brought on by silly lending practices the last several years) we are not yet to the bottom of this mess. 

As far as buyers go, the old adage of "buy low, sell high" is in full effect.  Those that can buy, especially with good credit and full documentation will be pleasantly pleased with both the mortgage process and the value they can pick up on houses.  When everyone is selling, a long term investor will typically clean up.

Aug 23, 2007 09:34 AM
Bruce Bourgault, Vice President, Mpro
Central Pacific Homeloans - Honolulu, HI
Hi Clauded -- Good Post.  I am encourgaing my Realtors to keep at it as this really is a great time to buy.  With everyone nervous you can strike some great deals and as long as you are conventional, VA or FHA there is very little risk.  Aloha
Aug 23, 2007 09:38 AM
Peter M . Christopher
Fairfield County Home Inspection LLC - Fairfield, CT
Residential & Commercial Inspections in
Welcome to A/R.
Aug 23, 2007 01:03 PM
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate
Welcome to ActiveRain, Claude! Nice balanced perspective on today's mortgage market. Agents and lenders can both survive this challenge quite well. We just need to educate ourselves and our clients.
Aug 23, 2007 04:51 PM