He’s Baaaaaaaaaack!

Things have been quiet around here at Iamnotfacingforeclosure.com for about a month.  How many f*cked lenders can one write about?  We have also been busy getting some things ready on some properties for the upcoming heavy rental season.

But lo and behold, our hero has returned.  Thanks to a reader for pointing that out.  We will take a few days to catch up on things and then begin commentary again. 

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Another One Bites The Dust

Yet another lender has gone down in flames.  Decision One Mortgage has ceased origination operations due to ‘market conditions and declining production volumes’.  They will fund approved loans that complete by October 1st.  There will be no funding after October 1st.

Anyone with a loan in process  at Decision One that will not make that deadline will now have to scramble to find another lender.  This is bad for customers and brokers alike.  There have even been instances with other lenders going under where the loans have closed and on refinances, which require a 3 day right of recission period, the funding disappeared DURING the recission period.  That’s right – the loan closed but then the funds were not available for disbursement.  Talk about a mess.

Conforming lenders seem to be in pretty good shape but standards continue to tighten, even for the best credit borrowers.  Stay tuned.

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Rate Cut?

If the fed cuts rates this week, look for HELOC’s to adjust downward to follow the prime, which would most likely be 8%.  All of those home-as-ATM folks will get a small bit of relief on those monthly payments.

In the real world, we are seeing numerous sales reps jumping ship from lender to lender, especially in the subprime market as companies continue to go under.  Others are getting out of the wholesale market altogether and taking jobs in retail mortgages.  The layoffs and closures have put many folks on the streets.  A large number are changing industries altogether.

In addition, calls continue to come in from people worried that their ARMs are about to adjust (some for a 2nd or 3rd time).  Unfortunately, not a lot can be done with some of these loans due to tightening standards, poor credit of the borrower, or high debt ratios.  Some people are just plain stuck.

Last week in the Atlanta Journal, a family facing foreclosure was profiled and were SHOCKED when they arrived home from vacation to find a foreclosure notice and  pending courthouse sale of their property in the mail.  Now one wonders how someone could not know about something like this.  They say they have been fighting with their loan  servicer over charges and fees but you know what – you still have to make your payments.  Oh yea, this family, fresh off a vacation, also stated that they had put in a pool and hot tub.  The article did not say when they did it or how much they spent but when reading some of these articles on these folks who are in trouble, one just has to say ‘DOH’!

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Political Posturing

Yesterday, Christopher Dodd, senator from Connecticut, had the following to say regarding the mortgage crisis:

“We may have as many as 1 million to 3 million people who could lose their homes, not because they lost their jobs, not because the economy collapsed, but because they got bad deals on mortgages,” said Senator Christopher Dodd, a Connecticut Democrat who is chairman of the Senate Banking, Housing and Urban Affairs Committee.

Now I know there are unscrupulous and predatory lenders out there who have defrauded some people but typically, it’s been the greedy, cash out for goodies (SUV’s, credit cards full of platinum tv’s, etc), my house is an ATM crowd that are in trouble.  We see people all the time with 2 SUV payments and brother, you better believe they paid those on time so they can present the proper image with their vehicle, but when the mortgage is due, let it go to 30 days late and torpedo your credit.

Saying people got bad deals on mortgages as a blanket statement is spin at its best.  No one forced people to sign those refinance papers.  In fact, refinances require a 3 day right of recission so borrowers can be SURE they want to go through with the loan.

Too many people are complaining about ‘I didn’t know it would adjust’ and so on and so forth.   READ THE DOCUMENTS.  Take responsibility – fiscally responsible taxpayers do not want to bail out the live for today crowd.  Call and write your representatives and tell them you are against any bailouts.

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What is Casey doing now?

I have not seen much if anything regarding our hero lately.  However, things in Sacramento are not going well in the real estate industry so golden nuggets are probably not being mined from the email.

From the Sacramento Bee:

“Job growth has slowed down quite a bit in the first months of 2007,” said Howard Roth, chief economist at the California Department of Finance. “Construction, home sales — it’s all going down.”

Which is not news to Rachel Brandon of Sacramento. She shook an emphatic “no” when asked Tuesday if she is better off than she was in 2005.

“My career for the past 10 years was in the mortgage industry,” said Brandon, who is 39. “I have a license to do loans. Two years ago I was making lots of money — I was making deals in my pajamas from home. Now I’m waiting tables at Denny’s for $8 an hour.”

Still, she’s optimistic.

“I really like my job at Denny’s,” she said. “I’m learning quite a bit, and someday I’d like to have my own cafe. But, two years ago if you asked me if I’d be working for $8 an hour today, I’d have said ‘God, no way.’ ”

Jamba Juice might be hiring too.

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Lenders Dropping like flies!

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.

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More Tightening

Suntrust has announced that 100% CLTV 2nd mortgage loans are no longer available, no matter what the credit score.  Previously, borrowers could do a fixed rate second mortgage to 100% at reasonable rates or piggy back a 20% second with an 80% first to get 100% financing and avoid private mortgage insurance.

This is a pretty big step as 100% seconds have been around for a long time for good credit borrowers.  In addition, Suntrust announced huge layoffs.

While the trend the last few days has been down in the prime markets, other lenders are still raising rates.  These are mostly the non-conforming lenders that still lend to prime credit borrowers – i.e. your loan is somewhere outside the Fannie Mae/Freddie Mac box. 

My advice is if you are trying to do any kind of loan that is not conforming to Fannie/Freddie guidelines, DO IT NOW!  Too many times borrowers mess around, wait, or whatever and in this current market, the loan you have today may not be available tomorrow, literally.

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