Don't Panic

Yesterday I got the following message from a loan broker I have worked with in the past;

Many of you have heard that there is a contraction going on in the Mortgage business. This is accurate information and not being nearly as overstated as the incomes which were used to underwrite many of the problem loans leading to this so-called “meltdown”.

The following are areas of concern in our mortgage market and subsequently have brought about a violent reaction by the top lenders in our country and aimed directly at reducing their exposure to the riskier loans.

I read this sobering info this morning..

Loan To Value’s(LTV) of 98% or more combined with FICO scores of 680 or less accounted for 12% of home purchases in 2006 and 77% of delinquencies!

100% financing with Lower credit core borrowers(below 660 mid-score) using a stated income or reduced documentation loan structure. This is the single largest place where we have seen a constriction. It used to be pretty easy to get done but no longer.

100% financing below 620 mid-score, regardless of documentation. This is the 2^nd largest sector we have seen constriction.

This is most likely the leading edge of a vast change in the mortgage market. This is not the end for all of you with FICO scores lower than 680, but it does mean that you have to do more work to qualify for a loan. You may have to put things of for a time to correct your credit score, and to save more money to buy a home.

For you sellers, when accepting offers, be very much aware of the type of loan the buyer is coming with. Really investigate the loan officer. You do not want things to fall apart at the last minute.