August numbers out. No impact of the credit crunch in San Diego…

[bigtrouble]

Banks are not holding on to their REOs.

Banks are outsourcing their REOs to companies who try to make a target of closing a certain percentage of their volume a month by selling to large investors and auction houses.

Large investors buy in bulk. They are the ones who are looking at entire portfolio, and selling off the ones right now that can turn a profit. The ones that don’t look immediately profitable, well, those are the ones you work, and work hard. Someone will take a lot of little properties they can sell immediately in non-bubble areas mixed in with a few toxic high value loans with big losses in high value areas. Its the way you deal with risk in portfolio management.

Banks aren’t dumb. Its just the sales guys have been getting more ear time than the risk guys the last few years. Times have changed, and so have the profit opportunites.

[Duck]

Rockemsock,

I disagree with your assumption that those pendings prior to August would not be effected by the lack of liquidity in the mortgage market which peaked n early/mid August. A loan does not fund until a day or two before a property closes, and a lender can come up with dozens of conditions that give them an out not to fund the loan.

These numbers for August, if accurate, are very surprising.

[HLS]

Rock and Duck you are both right…

I think what ROCK was trying to say was that most people purchase with 30 day locks, so anything that funded/closed in August was possibly locked in July or early August before the jumbo fiasco.

Some of August loans could have been conforming amounts.

Lenders CAN come up with reasons not to fund, but they don’t make any money if they don’t fund it. A lock can actually mean a commitment for that borrower only, so it’s not like they can shift the funds elsewhere.

Funders and underwriters also get paid on actual closed loans. They aren’t looking for reasons to not fund a loan, they just need to be sure that their A is covered.

In July-early August, there were 5 YR fixed jumbos available at 5.75%,, now around 7% on that program.

The September number will be interesting.

There has been and remains no problem with conforming amounts of 417K or below. 30 YR Fixed are well below 6% again, but it isn’t helping those with no equity.

In many cases a 90% loan of 2 years ago is 100% today.
Even some 2005 80% loans are near 100% today.

The current market is a gas gauge that is running out of fuel, on E, sputtering along slowly until the final stop.
Nobody knows exactly how far the needle will go past E.

[Author]

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