Good News - Mortgage Applications Up 1%

The mortgage business was up slightly last week, after an adjustment to reflect the Columbus Day holiday, according to the Mortgage Bankers Association weekly Mortgage Applications Survey. Application volume was up almost 1%.

Mortgage interest rates were mostly flat:

• 30-year fixed-rate mortgages remained unchanged at 6.4 percent;
• 15-year fixed-rate mortgages increased to 6.09 from 6.03 percent;
• 1-year ARMs increased to 6.17 from 6.15 percent

Self-Employed? It's Harder to Get A Mortgage

USA Today ran a story on how it's more difficult for self-employed people to get a home loan today. Many lenders have closed their doors entirely. And many lenders that still offer such loans have tightened their standards, making it harder for self-employed borrowers to qualify.

Here’s what self-employed borrowers need to qualify for a mortgage in this new environment:

More documentation. Along with two years of tax returns, self-employed borrowers might be asked to provide a profit-and-loss statement, bank statements and proof that they’ve been in business for at least two years. A letter from their accountant probably won’t be good enough.

Fewer tax deductions. Self-employed workers who plan to buy a home in the next year or two might want to forgo some deductions. Show as much income as you can.

Larger downpayments. An old-fashioned 20 percent down is very persuasive.

Excellent credit. A credit score of 720 or higher will give a self-employed borrower some choices.

Patience. Even for well-off business owners, qualifying for a mortgage is not that smooth, easy no-brainer like it used to be. If you want it to be quick, you’re paying a higher price.

Source: USA Today, Sandra Block (10/02/2007

Some buyers having trouble getting a mortgage now

Last week Freddie Mac, the second largest government backed mortgage underwriter, made some significant changes to its underwriting guidelines. Concerned by their potential exposure to non-performing loans as the number of borrowers defaulting is increasing sizably, they tightened the parameters required for Freddie Mac to purchase these loans from the originators. The investors who buy Mortgage Backed Securities on Wall Street are fearful that their portfolio of loans will default and they will be left holding the bag. The shocking statistic I read last week was that almost 50% of the mortgage loans currently held by Freddie Mac would no longer qualify under the new guidelines.

What does all of this mean to you…

Sub-Prime lenders are scrambling to accommodate the new Freddie Mac guidelines. I’ve received multiple notices from lenders whose product lines are being pared down or eliminated to meet the new conditions and demands coming indirectly from Wall Street. A few days ago was news that New Century Mortgage is tittering on the brink of bankruptcy, looking to join competitors who have already closed their doors:
Own it Mortgage - closed its doors
Sebring Mortgage - closed its doors
Axis Mortgage - closed its doors
Oak Street Mortgage - closed its doors
Right Away Mortgage - closed its doors
Secured Funding - closed its doors
Encore Credit - closed its doors
Acoustic Home Loans - closed its doors due to a sudden increase in repurchases
Ampro - gone acquired by United Financial Corp.
Silver Trust - closed it's doors
Freedom Mortgage - not doing 2nd TD's anymore.
Decision One - closed 6 regional centers. Division of Option One.
Mortgage Lender Network (MLN) - "stopped funding residential loans" on 12/29 (they didn't actually say they were closing) but they have closed.
E-loan - announced it will close their sub prime wholesale division
Meritage - Sold to Lime Financial
Mandalay - Closed it Doors
Plus rumors of others struggling financially

Action required…

If you have a transaction which will require Sub Prime lending, my strong recommendation is to consult with your mortgage specialist immediately to confirm the program still exists and if it does, lock it right now before that changes. I know I’ve filtered my pipeline to ensure no one is surprised down the road.

Source: TheHarperTeam.com

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Bradenton Real Estate