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August 11, 2007 at 7:12 AM #73330August 11, 2007 at 8:12 AM #73204
Pasadena Broker
ParticipantMorning all,
Guess this thread isn’t going to drift to the bottom anytime soon…
Allan from Fallbrook:
From the inside, last Friday was a bomb on the business. With the closing of American Home Mortgage, it spooked all the other lenders, that Friday was nothing but constant guideline changes and programs getting yanked. A good friend of mine was a corporate trainer, I called him on Tuesday and he sounded hopeful that IndyMac might buy them, but I didn’t have it in me to tell him that it probably won’t happen on such short notice. I post and read on a mortgage broker forum and from some of the threads on there it was a whine and cheese fest. Jumbo rates went up .75 to 1.5 depending on the documentation. Across the board, any non-conforming loan went up dramatically. I’ll give you an example, I have a client that’s purchasing a duplex, credit is a little shaky, has a nice sizeable down payment, stated documentation, and his rate with a particular lender went from 8.5 to 10.5 within one day. That’s crazy, it’s turned the alt-a business on its’ head.
The wall street guys see the volume of deals getting pulled and figure no biggie, the smarter ones are the ones connecting the dots. It’s a domino effect, that hasn’t drifted down to the market yet. Buyers in escrow that didn’t have locks on their loans got screwed, sellers that need to sell because they’re in escrow for another place got screwed, homeowners that purchased within the past 3 years on anything but a fixed rate mortgage got screwed, and so forth, you get the idea. It’s put a crimp on the business, but most don’t realize it because they haven’t felt it.
As for the business, the refi business is done, subprime and now alt-a is in the crapper, they’re still around, but not in the same fashion as they were before, which leaves conforming loans, first time homebuyers, and homeowners getting 2nd mtgs.. I have several other friends that are brokers in different areas and it’s the same with them. One of them is focusing on Helocs and stand alone seconds, while another is scrambling and worried since he can’t sell his loans on the secondary market that he funded with his warehouse lines. Brokers that had a gangbuster month in July that funded on their warehouse lines are probably going to be out of business soon. As for me personally, surprisingly I’m alright. The buyers I have, have solid down payments and credit. Some are first time buyers, others aren’t so and are buying due to changes in lifestyle (kids, divorce, the usual). Maybe because I’m old school, underpromise and overdeliver, go out of my way to make sure the client can stay in the house long term, have good working relationships with my realtors, have clients that don’t want me dead or wish I was in hell, don’t ride my appraisers for value, and whatever else. Me and karma are old friends and I don’t like pissing her off. I do what I feel is the right thing to do.Snail:
Was I talking to you directly, if you didn’t post, then it doesn’t apply to you does it? Or do you see yourself as the all encompassing forum? Great attention to detail, but you conveniently missed this “ I get calls from client referrals of people like her in the same exact financial position. Stuck, can’t rent, can’t sell, can’t refi” which makes me a stock broker??? Geography class called genius, says it wants you to teach it.August 11, 2007 at 8:12 AM #73328Pasadena Broker
ParticipantMorning all,
Guess this thread isn’t going to drift to the bottom anytime soon…
Allan from Fallbrook:
From the inside, last Friday was a bomb on the business. With the closing of American Home Mortgage, it spooked all the other lenders, that Friday was nothing but constant guideline changes and programs getting yanked. A good friend of mine was a corporate trainer, I called him on Tuesday and he sounded hopeful that IndyMac might buy them, but I didn’t have it in me to tell him that it probably won’t happen on such short notice. I post and read on a mortgage broker forum and from some of the threads on there it was a whine and cheese fest. Jumbo rates went up .75 to 1.5 depending on the documentation. Across the board, any non-conforming loan went up dramatically. I’ll give you an example, I have a client that’s purchasing a duplex, credit is a little shaky, has a nice sizeable down payment, stated documentation, and his rate with a particular lender went from 8.5 to 10.5 within one day. That’s crazy, it’s turned the alt-a business on its’ head.
The wall street guys see the volume of deals getting pulled and figure no biggie, the smarter ones are the ones connecting the dots. It’s a domino effect, that hasn’t drifted down to the market yet. Buyers in escrow that didn’t have locks on their loans got screwed, sellers that need to sell because they’re in escrow for another place got screwed, homeowners that purchased within the past 3 years on anything but a fixed rate mortgage got screwed, and so forth, you get the idea. It’s put a crimp on the business, but most don’t realize it because they haven’t felt it.
As for the business, the refi business is done, subprime and now alt-a is in the crapper, they’re still around, but not in the same fashion as they were before, which leaves conforming loans, first time homebuyers, and homeowners getting 2nd mtgs.. I have several other friends that are brokers in different areas and it’s the same with them. One of them is focusing on Helocs and stand alone seconds, while another is scrambling and worried since he can’t sell his loans on the secondary market that he funded with his warehouse lines. Brokers that had a gangbuster month in July that funded on their warehouse lines are probably going to be out of business soon. As for me personally, surprisingly I’m alright. The buyers I have, have solid down payments and credit. Some are first time buyers, others aren’t so and are buying due to changes in lifestyle (kids, divorce, the usual). Maybe because I’m old school, underpromise and overdeliver, go out of my way to make sure the client can stay in the house long term, have good working relationships with my realtors, have clients that don’t want me dead or wish I was in hell, don’t ride my appraisers for value, and whatever else. Me and karma are old friends and I don’t like pissing her off. I do what I feel is the right thing to do.Snail:
Was I talking to you directly, if you didn’t post, then it doesn’t apply to you does it? Or do you see yourself as the all encompassing forum? Great attention to detail, but you conveniently missed this “ I get calls from client referrals of people like her in the same exact financial position. Stuck, can’t rent, can’t sell, can’t refi” which makes me a stock broker??? Geography class called genius, says it wants you to teach it.August 11, 2007 at 8:12 AM #73333Pasadena Broker
ParticipantMorning all,
Guess this thread isn’t going to drift to the bottom anytime soon…
Allan from Fallbrook:
From the inside, last Friday was a bomb on the business. With the closing of American Home Mortgage, it spooked all the other lenders, that Friday was nothing but constant guideline changes and programs getting yanked. A good friend of mine was a corporate trainer, I called him on Tuesday and he sounded hopeful that IndyMac might buy them, but I didn’t have it in me to tell him that it probably won’t happen on such short notice. I post and read on a mortgage broker forum and from some of the threads on there it was a whine and cheese fest. Jumbo rates went up .75 to 1.5 depending on the documentation. Across the board, any non-conforming loan went up dramatically. I’ll give you an example, I have a client that’s purchasing a duplex, credit is a little shaky, has a nice sizeable down payment, stated documentation, and his rate with a particular lender went from 8.5 to 10.5 within one day. That’s crazy, it’s turned the alt-a business on its’ head.
The wall street guys see the volume of deals getting pulled and figure no biggie, the smarter ones are the ones connecting the dots. It’s a domino effect, that hasn’t drifted down to the market yet. Buyers in escrow that didn’t have locks on their loans got screwed, sellers that need to sell because they’re in escrow for another place got screwed, homeowners that purchased within the past 3 years on anything but a fixed rate mortgage got screwed, and so forth, you get the idea. It’s put a crimp on the business, but most don’t realize it because they haven’t felt it.
As for the business, the refi business is done, subprime and now alt-a is in the crapper, they’re still around, but not in the same fashion as they were before, which leaves conforming loans, first time homebuyers, and homeowners getting 2nd mtgs.. I have several other friends that are brokers in different areas and it’s the same with them. One of them is focusing on Helocs and stand alone seconds, while another is scrambling and worried since he can’t sell his loans on the secondary market that he funded with his warehouse lines. Brokers that had a gangbuster month in July that funded on their warehouse lines are probably going to be out of business soon. As for me personally, surprisingly I’m alright. The buyers I have, have solid down payments and credit. Some are first time buyers, others aren’t so and are buying due to changes in lifestyle (kids, divorce, the usual). Maybe because I’m old school, underpromise and overdeliver, go out of my way to make sure the client can stay in the house long term, have good working relationships with my realtors, have clients that don’t want me dead or wish I was in hell, don’t ride my appraisers for value, and whatever else. Me and karma are old friends and I don’t like pissing her off. I do what I feel is the right thing to do.Snail:
Was I talking to you directly, if you didn’t post, then it doesn’t apply to you does it? Or do you see yourself as the all encompassing forum? Great attention to detail, but you conveniently missed this “ I get calls from client referrals of people like her in the same exact financial position. Stuck, can’t rent, can’t sell, can’t refi” which makes me a stock broker??? Geography class called genius, says it wants you to teach it.August 11, 2007 at 8:20 AM #73207CMcG
ParticipantBwahahaha. Congrats to the person who regged the moniker Hot Blonde. If the real Pasadena Broker ever comes back here, he/she needs to realize that there are not only Realtors and appraisers on here, as has been mentioned, but also homeowners like me who, thank God, did not go down the toxic road, although I came close.
August 11, 2007 at 8:20 AM #73331CMcG
ParticipantBwahahaha. Congrats to the person who regged the moniker Hot Blonde. If the real Pasadena Broker ever comes back here, he/she needs to realize that there are not only Realtors and appraisers on here, as has been mentioned, but also homeowners like me who, thank God, did not go down the toxic road, although I came close.
August 11, 2007 at 8:20 AM #73336CMcG
ParticipantBwahahaha. Congrats to the person who regged the moniker Hot Blonde. If the real Pasadena Broker ever comes back here, he/she needs to realize that there are not only Realtors and appraisers on here, as has been mentioned, but also homeowners like me who, thank God, did not go down the toxic road, although I came close.
August 11, 2007 at 8:48 AM #73220Navydoc
ParticipantThanks for the great insider info PB, and it leads me to my question. Looking at all the charts available on line regarding the breakdown of the mortgages out there, isn’t there a substantially larger sum of money in absolute terms in the Alt-A market? All you hear on the news today is Subprime this, Subprime that (Fox News in the backround just said it twice), but don’t the Alt-A loans generally involve a lot more jumbos and ARMs used as affordability tools? It seems everyone I know in SD with a loan made in the last 3 years qualifies as an Alt-A. My mind is a medically trained one, not a finacial one, and I’ve been addicted to these posts the last few weeks trying the correct this deficiency in my knowledge base, and it seems that Alt-A has a much higher potential to dent the economy than the Subprime “crisis”.
August 11, 2007 at 8:48 AM #73342Navydoc
ParticipantThanks for the great insider info PB, and it leads me to my question. Looking at all the charts available on line regarding the breakdown of the mortgages out there, isn’t there a substantially larger sum of money in absolute terms in the Alt-A market? All you hear on the news today is Subprime this, Subprime that (Fox News in the backround just said it twice), but don’t the Alt-A loans generally involve a lot more jumbos and ARMs used as affordability tools? It seems everyone I know in SD with a loan made in the last 3 years qualifies as an Alt-A. My mind is a medically trained one, not a finacial one, and I’ve been addicted to these posts the last few weeks trying the correct this deficiency in my knowledge base, and it seems that Alt-A has a much higher potential to dent the economy than the Subprime “crisis”.
August 11, 2007 at 8:48 AM #73347Navydoc
ParticipantThanks for the great insider info PB, and it leads me to my question. Looking at all the charts available on line regarding the breakdown of the mortgages out there, isn’t there a substantially larger sum of money in absolute terms in the Alt-A market? All you hear on the news today is Subprime this, Subprime that (Fox News in the backround just said it twice), but don’t the Alt-A loans generally involve a lot more jumbos and ARMs used as affordability tools? It seems everyone I know in SD with a loan made in the last 3 years qualifies as an Alt-A. My mind is a medically trained one, not a finacial one, and I’ve been addicted to these posts the last few weeks trying the correct this deficiency in my knowledge base, and it seems that Alt-A has a much higher potential to dent the economy than the Subprime “crisis”.
August 11, 2007 at 9:19 AM #73225PerryChase
ParticipantExcellent point NavyDoc. An ARM is an ARM regardless of it being Suprime, Alt-A, or prime.
http://www.newsday.com/business/nationworld/ats-ap_business12aug10,0,5500889.story
1) If you read the AP story, below is what they say about Option ARMs and interest only ARMs.
2) But IN ADDITION to that, you have to add the regular ARMs that are reseting at higher interest rates.
2) FURTHERMORE, you need to add all the negative cash flow investments (fixed, ARMs or whatever) where they owners’ staying power is being eroded day by day. How long can investors (even prime) bleed cash before they go bankrupt? For Downtown SD, were’re probably talking about 80% of owners.
All the news that I read indicate that there’ll be 2 million +++ foreclosures before the mess is cleaned up.
“Lenders made an estimated $581 billion in option ARM loans during 2005 and 2006 while doling out nearly $1.4 trillion in interest-only ARMs, according to LoanPerformance. A recent study estimated about $325 billion of these loans will default, leading to more than 1 million homeowners relinquishing their property to lenders. By comparison, about $212 billion in subprime loans were delinquent through May. ”
” Christopher Cagan, CoreLogic’s director of research and analytics, predicts about 1.1 million ARMs totaling $325 billion will sink into foreclosure as rising monthly payments squeeze borrowers. After accounting for the money recovered through property sales, he expects the losses from the fallout to total $112 billion, with the damage spread out over six years. ”
August 11, 2007 at 9:19 AM #73349PerryChase
ParticipantExcellent point NavyDoc. An ARM is an ARM regardless of it being Suprime, Alt-A, or prime.
http://www.newsday.com/business/nationworld/ats-ap_business12aug10,0,5500889.story
1) If you read the AP story, below is what they say about Option ARMs and interest only ARMs.
2) But IN ADDITION to that, you have to add the regular ARMs that are reseting at higher interest rates.
2) FURTHERMORE, you need to add all the negative cash flow investments (fixed, ARMs or whatever) where they owners’ staying power is being eroded day by day. How long can investors (even prime) bleed cash before they go bankrupt? For Downtown SD, were’re probably talking about 80% of owners.
All the news that I read indicate that there’ll be 2 million +++ foreclosures before the mess is cleaned up.
“Lenders made an estimated $581 billion in option ARM loans during 2005 and 2006 while doling out nearly $1.4 trillion in interest-only ARMs, according to LoanPerformance. A recent study estimated about $325 billion of these loans will default, leading to more than 1 million homeowners relinquishing their property to lenders. By comparison, about $212 billion in subprime loans were delinquent through May. ”
” Christopher Cagan, CoreLogic’s director of research and analytics, predicts about 1.1 million ARMs totaling $325 billion will sink into foreclosure as rising monthly payments squeeze borrowers. After accounting for the money recovered through property sales, he expects the losses from the fallout to total $112 billion, with the damage spread out over six years. ”
August 11, 2007 at 9:19 AM #73355PerryChase
ParticipantExcellent point NavyDoc. An ARM is an ARM regardless of it being Suprime, Alt-A, or prime.
http://www.newsday.com/business/nationworld/ats-ap_business12aug10,0,5500889.story
1) If you read the AP story, below is what they say about Option ARMs and interest only ARMs.
2) But IN ADDITION to that, you have to add the regular ARMs that are reseting at higher interest rates.
2) FURTHERMORE, you need to add all the negative cash flow investments (fixed, ARMs or whatever) where they owners’ staying power is being eroded day by day. How long can investors (even prime) bleed cash before they go bankrupt? For Downtown SD, were’re probably talking about 80% of owners.
All the news that I read indicate that there’ll be 2 million +++ foreclosures before the mess is cleaned up.
“Lenders made an estimated $581 billion in option ARM loans during 2005 and 2006 while doling out nearly $1.4 trillion in interest-only ARMs, according to LoanPerformance. A recent study estimated about $325 billion of these loans will default, leading to more than 1 million homeowners relinquishing their property to lenders. By comparison, about $212 billion in subprime loans were delinquent through May. ”
” Christopher Cagan, CoreLogic’s director of research and analytics, predicts about 1.1 million ARMs totaling $325 billion will sink into foreclosure as rising monthly payments squeeze borrowers. After accounting for the money recovered through property sales, he expects the losses from the fallout to total $112 billion, with the damage spread out over six years. ”
August 11, 2007 at 9:24 AM #73232PerryChase
ParticipantPasadena Broker, your buyers who are being denied loans are not being screwed. They are being saved. They are marginal buyers with spotty ability to pay. They should not be taking on mortgages in this declining market (making a pact with the devil).
Think of the mortgage market as being “born again” after havin’ “seen the light.”
The sellers on the other hand are screwed for sure.
August 11, 2007 at 9:24 AM #73354PerryChase
ParticipantPasadena Broker, your buyers who are being denied loans are not being screwed. They are being saved. They are marginal buyers with spotty ability to pay. They should not be taking on mortgages in this declining market (making a pact with the devil).
Think of the mortgage market as being “born again” after havin’ “seen the light.”
The sellers on the other hand are screwed for sure.
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