Over the past couple of weeks, many of the lenders who work with sub prime or riskier loan products like, 80/20 piggy-back products, interest-only, negative amortization loans, no income or asset verification loan products are under increasing pressure to buy back those loans which are in default.
The default and foreclosure rate on these loan products are so high that many lenders have had no choice but to close their doors and file for bankruptcy protection because their investors are forcing them to repurchase those loans. Over the past week or so Linda Jean and I have been talking to Mortgage Companies, Title Companies and other Realtors just to find out several clients have been left with out a Mortgage Company or Mortgage Underwriter right before closing. We had 3 just last week have to find new Lenders with less than a week to go before they were to close.
There is no better time than now to make sure you have the right Lender to work with. As in one of my previous Blogs was talking about the number of Mortgage Companies closing everyday, up to 50. I was talking to one of my lenders last week and he said a sales rep from one of his Underwriters came into his office to do his pitch on how they are going to have all kinds of new products with the next morning the Underwriter had closed there doors.
In a report released this week, "Mortgage Payment Reset: The Issue and the Impact," Cagan studied 8.37 million adjustable-rate mortgages that originated between 2004 and 2006, and estimated that 1.1 million of those homeowners will end up in foreclosure during the span of six to seven years. The debt from the mortgages will total $326 billion, and after foreclosure and resale, about $112 billion will be lost to remaining equity, lenders and investors over several years, according to the report
Some Brokers are looking for safer routes? Remember FHA insured loans? For the past 10 years, programs like Nehemiah, Quickdown and Geniuses Programs "plus many more" has helped thousands of families achieve homeownership working with Realtors, builders and lenders nationwide to provide more than a Billion dollars in down payment gift funds. Ask your lender if he or she is qualified for FHA and what kind of down payment assistance programs they have to offer.
Of course this only works if you are a little credit challenged, have a little debt and don't make six figures at your job and your home mortgage is less than $200,160 in Tarrant County Texas. I am sure in the next few weeks and months we are going to see lots of creative people have all types of programs for the home buyer.
We will also see if this is going to help with the Foreclosure rate going off the charts, I just ran a report from the MLS and found over 1500 foreclosures in Tarrant County Texas alone, this does not include the 500+ active listings that are labeled "call agent" under the seller type.
I think we all knew something was coming and lets hope this does the trick, if not, the big guys (whoever that is) will come out with a new plan, time will tell.
OK I am off my soapbox, thank you for listening, say goodnight Gracie.
Roger Paschal
Century 21 Mike Bowman, Inc.