Unless you have been in a bunker for the past 24 months, you should be aware of the challenges the mortgage world is facing. Fingers are pointed in all directions, speculation is abundant, and fear and skepticism appear to be driving the housing market almost as much as fact.
On one had you find blame placed on lenders, on the other blame is placed on mortgage brokers, in rare instances people who bit off more than they could chew (pay for) take some heat as well.
Banks are losing money right and left, and the more you read, the more you learn that real estate financing is harder to get. even people who have paid their bills perfectly can run into trouble finding financing.
In the industry we are having to look a little deeper to find options for financing. Purchasing a home with no money down is much harder to do now than it was in the past, and rightfully so. Little known programs that in the past were considered too much of a hassle to process are now opening up (USDA loans and bank CRA programs) Other sources of financing used in the past are still being overlooked – such as Seller Carrybacks. These programs allow the seller of the home to effectively finance the down payment. This can be an effective tool when selling a home to someone who doesn’t have a down payment, and also helps the seller stand out in the market. Typically a 20% carry back will be required.
FHA is becoming a much larger part of the market, it is one of the last places to finance a manufactured home, and at the present time is still allowing the seller to effectively make the down payment for the buyer (through a non-profit gift fund), but watch for changes coming to this market soon.
The short term future for getting people into homes is uncertain. Financing options are limited and people are having trouble getting out of bad loans or qualifying for new ones. financing loans over the $417k conforming loan limit has tightened up due to a lack of secondary market loan purchasers even on loans that are performing.
Over time rationale will return to the market and people will get back to watching the fundamentals. Loans that perform, whether conforming or subprime, that have a track record of performing will return to the market. Responsible home owners who want to borrow money will be able to access financing. How long this process takes remains to be seen. Many factors play into this, and it would take a week to present them all…. The best we can do is keep pushing for responsible lending policies, and do our best to put customers into loans that are truly the best for them.
