Thread: Sub-Prime Lenders waive Goodbye to Florida!

We`re in the midst of attempting to assist 4 buyers with securing loans. These loans are being shopped to sub-prime lenders. Yesterday, we received a call from one of our mortgage brokers who told us that they received E-mails from lenders who effectively have ceased writing business. Our mortgage broker was really depressed.
All told 30 different sub-prime lenders have stopped writing business, somehave closed shop!
Overnight, Becon scores have suddenly been raised 40-50 Pt's,thereby leaving 3 out 4 buyers we`re dealing with are unable to qualify for a loan.
Most of us have expected this "Turn of Events", nobody ever knows when the "Curtain" would fall.
4 years ago, we used to shake our heads when "Lenders" would tell us that they`re able to finance a transaction with "0 Down".
It was so hard to comprehend that these lenders would go out on a limb to "Finance" deals that a "Blindman" wouldn`t consider! We used to caution our "Sellers" about entering into these types of transactions. We`d load the transaction with "Kick Out Clause, loan commitments with a 2 week period, appraisal contingencies etc. Our goal and job was to insure that the transaction would close.
As the years moved forward it was common place to accept these "100% Financing" as part of doing business! We learned to adapt, knew that many times it was a toss up if they`d close on time or if this lender or that lender would "Underwrite" the deal. Majority of our "buyers" wouldn`t enter into a transaction without this type of financing.
I`ll never forget the time we sold a home to a buyer who purchased a $695,000 with "0". I kept asking the Mortgage Broker if this person knew what he was doing, the Mortgage Broker assured us that "Everything" is OK! Again, the times were different we didn`t question the buyers or the lenders and since we as Realtors don`t handle the financing, it was our attitude to leave the "Driving to the lender".
As of today, I will be sending out letters to our sellers. In our letter I will be mentioning that I believe we`re in for another price "Fallout" and I do expect a major slowdown when it comes to Buyers securing loans. I will remind them that appraisals will be soon lower than before and the fact that their home appraised for "X" amount in August will mean "nothing" today!
I actually have "Sellers" who we`re begging to take certain "offers" believing that in the next 90 days the price of their homes will "Tank". Some have taken our "Professional Advice" bit the bullet and sold, others stubbornly believe that the market will bounce back, and think we`re crazy for asking them to accept "Offers" that are not what they expected!
I`m positive many of you have the exact scenario unfolding right before your eyes as well! I`m curious how you`ll handle this situation with your sellers as well.
Are many of you discussing this "Turn of Events" with your clients or, do you feel it`s not our place to interfere?

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I'm a mortgage broker and a Realtor in Georgia. We were notified that several lenders had stop doing business and all files were to be returned.
I contribute this to the 2/28 and the 3/27 adjustible rate loans. I was never a fan of this type of lending. No one can fix their problems in 2 to 3
years. I've done hundreds of 100% FHA, VA and conv nich type programs and not once was there a problem. I Just closed a 10 year I/O 100% cash out 30yr AM, which took the customer from their current DTI of 60% to 35%. Hows about that tangible net benefit.

As a realtor we tend to look the other way thinking this wont effect us in any way. But, Foreclosures effect everyone sooner or later. We need to remember that this is our repeat business that we give to the lender. And
if it forecloses, Then what.

I was able to get a couple sub-prime borrowers locked in with Country Wide - they are tightening their belts but still have a few programs working for these folks.

Lost 14 deals in the last 3 months bacuse of sub-prime fallouts.

Granted the buyers were difficult, but were qualified. That is 14 more homes still on the market. Now multiply that by everyone else with deals that fell apart.

Government is crying about how difficult it is for a first time buyers, single parents, minorities, etc. to purchase a homes, yet offer no solutions.

Homeowners are once again paying for the entire population. I just read where they are taxing homeowners $50.00 year to build some government building in West Palm Beach. Why only tax homeowners???????? The building effect ALL residents??? Right?

The tax structure MUST change in order to make it equitable for all residents of this country.

I'm for a flat tax, and higher sales tax to do away with property taxes.

TAX REVOLT NOW!!! REVOLUTION..

Yea!
Tax revolation!

This would put the clients payments alot lower then they are now.
No tax, Eliminate MI. 30 to 40 year terms on all loans, Allow seller to pay as much as they want in concessions. HMMMM!

Seems like a no brainer!

When I heard about the tightening I just called the lenders of my buyer clients to make sure we still had financing. Sellers - I didn't discuss it with them because, honestly, we don't know how it will affect the spring market. There are just too many factors in play. From what I'm hearing, there are still programs out there for financing up to 100% - but credit score requirements are tighter. I work with a lender who is still offering a 100% type program but min scores are now 575 instead of 550 or maybe lower.

I'm sure other states are going to tighten up on their sub prime lending. I can't blame them with the foreclosure rate. It is out of control.

Im feeling the pain in Colorado..I lost 4 deals because of this. Im in the middle of fighting with a seller to get my buyers earnest money back. Overall I think this will be good for the industry!

I recently read an article in the New York Times called "Tremors at the Door" (you can search for it online) which was discussing the recent issues lenders are having. The most shocking statement was shown near the end...

[I]For his part, Mr. Dallas acknowledges that standards were lowered, but he placed the blame at the feet of investors and Wall Street, saying they encouraged Ownit and other subprime lenders to make riskier loans to keep the pipeline of mortgage securities well supplied.

Things are getting ugly in SoCal too.