Mortgage Market Meltdown
I attended a great seminar today called Mortgage Market Meltdown. To sum up everything the information that was given to us was that we are going back to the “old fashioned” way of doing loans…..DOCUMENTATION. And you might actually have to have a verifyable source of income.
In the past pretty much anyone with a pulse could qualify for a loan. As a result there are many people who weren’t capable of affording to live in their home in the first place defaulting on their loans thtat they never could afford….leaving our lenders, Wall Street, etc. without excess and in fact a loss of money. They will be lucky if they can recover 30% of each defaulted loan . It is estimated that 25% -40% of all laons were a sub prime loan in 2005-2006. Now that does not mean that ALL sub prime loans defaulted but it is definately an eye opener to how many “unqualified”people were approved for a loan. As a result billions and billions of dollars were lost.
There is acually an up side to this (depending on where you stand).
If have good credit and can verify your income to get approved for a loan then you could possibly qualify for a loan with VERY low interest rates. They are currently at record lows. In addition to low interest rates you have a great opportunity to get an awesome deal on a home. There is a high inventory of homes compared to a realtively low number of qualified buyers. Which means homes are staying on the market a considerable larger number of days. When that happens we call it a BUYER”S MARKET!
They may be attempts to help the mortgage crisis:
Current Legislation on HIll to increase FHA out reach to help with Subprime borrowers.
Current Legislation contemplating increasing Fannie and Frannie loan limits to help with the jumbo borrowers with $625,000 possibly being the new limit.
Educate buyers!!!!!
