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  • July 26, 2007 at 9:26 AM #9609
    HLS
    Participant

    A major subprime lender just announced updated guidelines…
    1) No more stated or limited doc loans. FULL Doc only
    2) 5 YR minimum ARMS. No more 2yr-3yr.
    3)Minimum credit score 540 (up from 500)
    4) Max cash out $100K
    5) 90% maximum financing. (Purchase or Refi)
    6) Impound accounts required

    Had these requirements been in place 5 years ago, we would not have had the bubble.

    Subprime is not only for those with low credit scores. There are times when high scores have other issues that require a subprime loan.

    This is an indication of what other lenders may do, at least for awhile.
    Many people can no longer qualify for refi’s.

    Having a pile of equity in your home isn’t as easy to get to as many people think. (It’s one of the big reasons that interest only loans should be considered)

    July 26, 2007 at 9:34 AM #67871
    PerryChase
    Participant

    Until all lenders have strict standards, the loose lender is stealing business from the strict lender.

    I’m sure mortgage brokers are not turning away borrowers; they shop to loan out to the most lenient lender. These days business is slow. The mortgage broker’s got to eat. Perhaps he can start attending caravans? 🙂

    July 26, 2007 at 9:34 AM #67937
    PerryChase
    Participant

    Until all lenders have strict standards, the loose lender is stealing business from the strict lender.

    I’m sure mortgage brokers are not turning away borrowers; they shop to loan out to the most lenient lender. These days business is slow. The mortgage broker’s got to eat. Perhaps he can start attending caravans? 🙂

    July 26, 2007 at 9:40 AM #67875
    donaldduckmoore
    Participant

    Do the lenders HAVE TO follow the guidelines? Will they get penalized if not?

    PerryChase, where is the money coming from for the mortgage brokers to do business? I thought they get money from the lenders also!!

    July 26, 2007 at 9:40 AM #67941
    donaldduckmoore
    Participant

    Do the lenders HAVE TO follow the guidelines? Will they get penalized if not?

    PerryChase, where is the money coming from for the mortgage brokers to do business? I thought they get money from the lenders also!!

    July 26, 2007 at 10:12 AM #67886
    betting on fall
    Participant

    Its the people with the money to lend who set the rules, and since that lending money has been coming from wall street- when the mortgage is packaged into a bond and sold- they decide, not a broker.
    Actually, I think now people are still guessing what wall street will be willing to buy up. I would assume that whoever set the rules outlined in the original post thinks mortgages meeting those criteria will be sellable on wall street, but I don’t think anyone knows right now.

    I think the real test of this housing market will be the next few months. How many buyers will this new criteria drive out of the market? How many people who need to refi will not be able to and will foreclose instead? These are the million (billion?) dollar questions.

    July 26, 2007 at 10:12 AM #67953
    betting on fall
    Participant

    Its the people with the money to lend who set the rules, and since that lending money has been coming from wall street- when the mortgage is packaged into a bond and sold- they decide, not a broker.
    Actually, I think now people are still guessing what wall street will be willing to buy up. I would assume that whoever set the rules outlined in the original post thinks mortgages meeting those criteria will be sellable on wall street, but I don’t think anyone knows right now.

    I think the real test of this housing market will be the next few months. How many buyers will this new criteria drive out of the market? How many people who need to refi will not be able to and will foreclose instead? These are the million (billion?) dollar questions.

    July 26, 2007 at 10:55 AM #67898
    HLS
    Participant

    There was recent guidance from the Department of The Treasury, FDIC, OTS and other agencies regarding Subprime Lending. The “Final Guidance” applies directly to any institution that is under their thumb. In general this is directly banks that lend their own money, with deposits that are covered by FDIC insurance.

    It probably does not apply to those who broker loans or hope to sell them off on Wall Street.
    I believe that any BANK could have a BANC division so these regulations wouldn’t apply. Crazy loophole.

    There will always be someone willing to take a risk at some rate, so crazy leneding won’t disappear completely.
    The potential losses in the next 36 months are staggering, but much of the risk is already spread out upon the global economy.

    There probably will be institutions that will fail and need a federal bailout ala Lincoln Savings Days. There are pension funds and other major funds that will collapse.

    The aftermath could be 1930’s like and further separate the rich from the poor. The middle class is shrinking.

    The “Final Guidance” (Until the revision!)
    http://www.fdic.gov/news/news/press/2007/pr07055a.html

    July 26, 2007 at 10:55 AM #67965
    HLS
    Participant

    There was recent guidance from the Department of The Treasury, FDIC, OTS and other agencies regarding Subprime Lending. The “Final Guidance” applies directly to any institution that is under their thumb. In general this is directly banks that lend their own money, with deposits that are covered by FDIC insurance.

    It probably does not apply to those who broker loans or hope to sell them off on Wall Street.
    I believe that any BANK could have a BANC division so these regulations wouldn’t apply. Crazy loophole.

    There will always be someone willing to take a risk at some rate, so crazy leneding won’t disappear completely.
    The potential losses in the next 36 months are staggering, but much of the risk is already spread out upon the global economy.

    There probably will be institutions that will fail and need a federal bailout ala Lincoln Savings Days. There are pension funds and other major funds that will collapse.

    The aftermath could be 1930’s like and further separate the rich from the poor. The middle class is shrinking.

    The “Final Guidance” (Until the revision!)
    http://www.fdic.gov/news/news/press/2007/pr07055a.html

    July 26, 2007 at 11:06 AM #67900
    sdrealtor
    Participant

    HLS,
    I dont think it has been said yet but here’s HEARTY welcome to you! I’ve been hanging around this forum for about a year and a half. Plenty of realtors have stopped by and a few straight shooters have hung around. Very few lenders have stopped by and none to my knowledge have hung around to become valuable contributors.

    I really hope you stick around.

    The Original sdr
    not to be confused with the new and improved SD R;)

    July 26, 2007 at 11:06 AM #67967
    sdrealtor
    Participant

    HLS,
    I dont think it has been said yet but here’s HEARTY welcome to you! I’ve been hanging around this forum for about a year and a half. Plenty of realtors have stopped by and a few straight shooters have hung around. Very few lenders have stopped by and none to my knowledge have hung around to become valuable contributors.

    I really hope you stick around.

    The Original sdr
    not to be confused with the new and improved SD R;)

    July 26, 2007 at 11:09 AM #67971
    Alex_angel
    Participant

    With standards like that, no one is ever going to be able to afford a home at today’s prices. let the slaughter begin.

    July 26, 2007 at 11:09 AM #67904
    Alex_angel
    Participant

    With standards like that, no one is ever going to be able to afford a home at today’s prices. let the slaughter begin.

    July 26, 2007 at 1:27 PM #67934
    HLS
    Participant

    Thank you,

    I just discovered this site a few days ago.

    I’m in the lending biz as a mortgage consultant in Murrieta. I’m not a salesman. I live in Fallbrook and have been in north county SD over 20 years.

    I got my first loan in 1980. I survived the upside down market of the 1990’s. I’ve had tenants for over 20 years.

    I over explain options to borrower’s so they can decide what’s right for them. I don’t make anything extra if they choose one over another. My fee is the same, and I hate option arms. I don’t make rebates on the back end.

    I try to stick with the facts and throw a bit of opinion in now and then. I’m definitely a straight shooter, which some people DON’T seem to like.

    I can poke holes in many ads and some financing myths.
    It’s just what I do.

    I yam what I yam. I’ll try and stick around for awhile.
    I might be able to be helpful to some, esp if they need to understand their financing options.

    July 26, 2007 at 1:27 PM #68001
    HLS
    Participant

    Thank you,

    I just discovered this site a few days ago.

    I’m in the lending biz as a mortgage consultant in Murrieta. I’m not a salesman. I live in Fallbrook and have been in north county SD over 20 years.

    I got my first loan in 1980. I survived the upside down market of the 1990’s. I’ve had tenants for over 20 years.

    I over explain options to borrower’s so they can decide what’s right for them. I don’t make anything extra if they choose one over another. My fee is the same, and I hate option arms. I don’t make rebates on the back end.

    I try to stick with the facts and throw a bit of opinion in now and then. I’m definitely a straight shooter, which some people DON’T seem to like.

    I can poke holes in many ads and some financing myths.
    It’s just what I do.

    I yam what I yam. I’ll try and stick around for awhile.
    I might be able to be helpful to some, esp if they need to understand their financing options.

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