Mortgage Lenders Tighten Lending Guildlines

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Services for Real Estate Pros with Financial Education Services
For the last several years in the booming housing market we have seen some very relaxed lending guidelines.Mortgage lenders over the past several months have began to tight lending guidelines across the board. In the purchase market place for sub prime borrowers with 580 credit scores it was easy to qualify for 100% financing. Most sub prime lenders today have raised there minimal requirement to 600 credit score or better, depending on the documentation type. Stated loans and 100% investor's loans have also seen an increase in required qualifying credit scores.

There have also been mortgage lenders in the sub prime market either close there doors or be put up for sale. To name a few, Ownit Mortgage and Sebring closed there doors while other mortgage lenders such as Option One which is owed by H&R Block was put up for sale. Account Executives for sub prime and Alt-A (typically credit scores between 580 and 620) companies have experienced there sale volume being cut in half from what it was 6 months ago.

These changes along with the decline in recent months in home sales and new home start ups has also hurt the mortgage brokerage businesses. 

The good news is as in an industry that has experienced as much growth as the housing industry has is the simple fact that there will be leveling off of home appreciation and the industry as a whole will get leaner with better loans being written and approved. This is good for the economy long term because it means stability in the housing market place. Mortgage lenders can not afford to have portfolios with loans that are not performing due to relaxed guidelines in a booming market.

There are still plenty of good programs being offered for first time home buyers and people with credit challenges. As a mortgage broker it simply means that we must be more prudent with our borrowers. Education with regard to credit is paramount when working with first time home buyers and seasoned borrower that have credit issues. Preparing a borrower whether they are buying or refinancing there homes is also paramount. Borrower are not aware of the recent changes that have been made in the industry and it is our job to get the word out - if you are going to make a change in the type of loan they have or if they plan of buying a new home get started early so that all issues can be addressed up front and they can be positioned properly when the time comes to do there financing.

Getting to the borrower ahead of time has always been the issue. Most borrowers, only because most don't know any better wait until the last minute and then try to handle there financing . Any issues that arise at the last minute, leaves them open for not always the best long term loan situation.

The housing market place is changing. Reports seem to indicate that for most area in the country homes prices have adjusted and will start leveling off while interest rates are still very favorable and should stay that way thru 2007 and into 2008. There are certain pockets of area in the country that have been affect greater than other in terms of depreciated property values but seems to be isolated.

The bottom line is there are plenty of good loan programs out there for all types of borrowers. It may require a little more work by your mortgage broker to properly prepare and educate the borrower, but that is a good thing long term. An educated borrower is always better for the economy long term.

For more information of home financing, equity management or credit repair contact:

Mark Bustamonte
Certified Mortgage Planning Specialist
Mortgage Sources Corp
http://www.mtgplanning.com/
markb@mtgplanning.com
866-840-2240 Toll Free

 

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