[quote=HLS]Not at all.. do you understand who “LENDERS” are ?? The govt is about the only lender today.
Lenders don’t make their own rules…”Lenders” Don’t make up the guidelines for 15/30 YR mortgages. There are slightly different guidelines for FNMA/FHLMC(Freddie)/FHA but that is how 90%+ of loans are originated today.
BANKS ARE MORTGAGE BROKERS..Wolves in sheeps clothing. They don’t have free loans. They don’t have the best rates. Consumers are clueless.
Salespeople sitting at desks telling people what is on their computer screen. Many have crappy credit scores and have never gotten a loan themselves. They originate loans to sell off just like mortgage brokers. A good mortgage broker will make your life easy and get you a great loan, a bad one will screw you even when it’s your friend or relative.
When guidelines are met, there is an endless amount of money available. The guidelines are getting tighter and tighter however.
FNMA loans need a DU approval from an automated system. Freddie loans are an LP approval.
Many wholesale lenders, banks included, have additional overlays for risk.
Banks don’t lend long and borrow short.
They don’t loan out their money for 30 years at 4.50% and pay depositor 3% for a 5 YR CD. That is suicide.
Mortgage brokers AND banks originate loans that are sold to FNMA etc who then bundles them into MBS (Mortgage Backed Securities) and sells them off with an implied guarantee of safety to “investors”
Most people think of a bank as one big happy company. The biggest ones are the biggest problems.
BANKS are (at least) 3 separate entities:
1) The building that you walk into where you make deposits and get screwed on fees
2)A SEPARATE MORTGAGE BROKER division that originates loans to be sold off
3)A SEPARATE division that services the loans that were sold off.
All divisions want to make a profit.
Because you started your loan at #1 above which then led to dealing with #2 and now you make payments to #3 doesn’t mean that you are going to get “special” treatment because you have banked with #1 and keep $100K in a CD.
I spoke with an auto finance manager the other day with 25 years in his industry. His comment to me was “consumers are stupid”. Most people got screwed if they bought a car during Cash for Clunkers. Prices went up, incentives disappeared, and it now appears that the $4500 is going to be taxed as income.
This is a simple overview of the situation.
Many people just don’t qualify for loans today, period. No such thing as a slam dunk, no brainer loan.
Portfolio loans are loans that a bank will keep in their portfolio/on their books. This might be ARMS with short term rates. 5 YR CD deposits means they have some comfort in lending on a 3YR or 5YR ARM.
Banks may make their own decisions on short term funds, but they often use same tight guidelines.
The more people think they know, the more dangerous they are..can’t remember who said it first.
Lots more could be written….HLS[/quote]
When I refer to “lenders,” I’m talking about the bondholders or other investors in the final mortgage products (MBSs, CMOs, CDOs, etc.).
Yes, I do understand that most banks are selling the loans, but they are selling them to **somebody** even if that somebody is a FNM/FRE bondholder, no? Again, I do understand the Fed is buying MBSs, but is that (Fed purchases) the **entire** market? If so, that is particularly frightening.
