Several more casualties this week – Accredited Home Lending being one, joining others such as First Magnus last week. The main reason is the sources of money are drying up so these lenders do not have access to the money needed to fund loans. Some are funding loans that have closed and are in the recission period but are no longer taking any new applications.
One peripheral problem, which is more frustrating than troublesome, is that the lenders that are still in business are being slammed by new loan packages. Turn around times in underwriting are doubling, which in turn is frustrating borrowers as they wait for an answer on their loans.
The subprime lenders still in existence are raising rates to cover more of their risk and raising minimum credit scores and lowering maximum loan to value ratios. We are seeing the elimination of stated income loans for w-2 wage earners – makes sense as if they are w-2, they should show the documentation and verify the actual income. However, we may even see stated income loans go away altogether at some point.
