Wow! What an interesting week last week. On Thursday, the buzz in my office was palpable. I'm newer to the business so have decided not to be affected by what's going on. But the more experienced loan officers in my office were scratching their heads. They were watching deals fall through on exotic (option ARM's for example) loans and having to place them with other lenders, locking and hoping that it would go through. I personally think the market got spooked by American Home Mortgage's failure.
So what should be done? Number one, realize this may not be a quick fix. For probably the next 30 days or so, the lenders will remain skittish and I wouldn't be surprised if there are more failures. If you have an opportunity to do conventional, conforming loans do them. We're entering a period where we need to be trusted advisors to our clients. We need to tell our clients that they need a good credit score and preferably money in the bank.
If you're looking to borrow money, make sure your financial house is in order. Know your credit score or check it free once/year at www.annualcreditreport.com. Save your money so you can bring it to the table. Lenders now want you to take some of the risk. Yes, 100% financing on purchases can still be had (for example, My Community is an excellent program) but expect to pay a higher rate and provide full documentation. I think FHA loans may come back in vogue. Yes, the paperwork can be cumbersome but you might be able to get a loan.
If you're a loan originator, don't despair. Get out of the office and contact your professional people (realtors, lawyers, CPA's, etc). The loans are out there. I believe we just need to source them. In conclusion, I don't think the market will turn in the near future. It's important to adjust accordingly and realize that all situations are usually temporary. Perhaps the Federal Reserve will step in this year and lower interest rates. Wouldn't that be nice? Have a great weekend!
Paul
Paul McFadden
Thanks, Jack. I appreciate it. Take care.
Paul
Paul, good post!
I think we are definitely on a roller coaster ride right now. It will be interesting what the next few weeks bring us!
Good advice for all of us. Buyers just need to have their ducks in a row. What I like about the recent changes to mortgage programs is that perhaps there will be less of a problem with foreclosures down the road.
Thanks, Beth. We'll see what happens. Best of luck to you in your business!
Paul
Thanks, Lori. I hope so too regarding the foreclosure problem. In the meantime, best of luck to you!
Paul
Paul:
It sounds like you have a good perspective on the market.
Thanks, Larry, for your comments. We've managed to hire some good LO's as well although we'll see if everyone sticks. I believe attrition will be high-most people just don't want to pay the necessary price. Good luck to you!
Paul
Thanks, Bill. I appreciate your input. Good luck to you and always enjoy the ride!
Paul