Local Mortgage Update: From the Horse’s Mouth
Even I get overwhelmed with all the various articles on “the mortgage meltdown”, I can only imagine how someone not in the business must feel these days. So I finally decided to ask my mortgage contacts face-to-face what is going on right now, so that buyers and sellers have accurate information. My email inbox has been getting filled lately from mortgage brokers telling me that they are still writing loans – but what the heck does that mean? We want the facts, thank you very much… so here’s the low down on what local mortgage contacts are telling me today.
Susan O’Driscoll, Princeton Capital confirms that lender guidelines are changing almost daily. She just showed me today’s update regarding lenders IndyMac, LandAmerica Financial, CIT, and Homecomings Financial. In yesterday’s memo titled “The good news…”, Susan lists the loans that are available. Compared to a few months ago, the packaging may be different; guidelines more stringent. Some lenders may require higher FICO scores now; some may agree to the same loan but with “full documentation” instead of “stated income” only. The loans that were popular for a few years – the 100% financing with stated income, stated assets – has taken an extended vacation. Coldwell Banker is affiliated with Princeton Capital, and local rep Susan O’Driscoll is a wonderfully knowledgeable and handy resource!
Bank of America’s Gordon Ling says, San Mateo County has spiked recently in foreclosures, but is still low compared to other California regions. He reports, the biggest difference for local buyers who may be faced with a median home price of a million dollars is the limited supply of Jumbo (nonconforming) loans now available. Bank of America is definitely writing them. When a bank does not have to rely on the secondary market for funding AND has its own underwriting, the internal accountability is in place. Conforming loans (under $417K) are more easily written – in part because of the backing of Fannie Mae and Freddie Mac.
A Princeton Capital report also notes that analysts estimate 60% of small mortgage brokers that existed in 2006 will vanish. Bobby at Bank of America agrees that many small brokers that he knows are looking for a job. There are highly professional and knowledgeable mortgage representatives and lenders out there, but you have to do your homework.
Latest update: I did not get feedback from Countrywide in time for this blog. So I’ll either do a follow up or we will hear from Countrywide directly in a comment. If any other mortgage professional wants to make a useful contribution here for buyers and sellers, please do.