Financial Meltdown – Forget About Buying a House???

Are You Kidding?? Once again media hysteria has created a wide gulf between realty and consumer perception. The emotional charge of news created for ratings is leading consumers to the wrong conclusions about the mortgage market.

Talking to many people over the last few weeks, I find a common misperception of – it’s impossible to get a mortgage these days, so why bother looking for a home.

The reality is – yes, it is more challenging to nurse the escrow process through to a successful closing, but mortgages are available. In fact, mortgages are probably safer than at any time in history. 

“There is no shortage of money available for home mortgages, no freezing of credit to purchase or refinance a house. Why? Because the American mortgage market effectively has been federalized – at least for the time being. More than 90% of new loans now are being made through the Federal Housing Administration insurance program, plus Fannie Mae and Freddie Mac,” says Kenneth Harney.

Mortgage Market Status

• Tougher Credit Standards – you can still get 97% financing and there is still money for first-time home buyers.
• Interest Rates – remain at historically attractive levels.
• Conforming Loan Maximums are at $729,500 through 12/31/08
• Home Prices have rolled back to 2003 and 2004 levels in many areas.

Housing and mortgage leaders say consumer worries about the stock market have obscured positive developments underway in real estate.

“The mortgage market has never shut down despite the global financial crisis,” says David Kittle of Wholesale Lending, Inc.

Tim Soldati of First Priority Financial in Pleasanton, California says, “The daily changes being reported in the news are leading consumers to the wrong conclusions about the availability of home mortgages.”

If you want to make the deal of a lifetime on a home in Danville, San Ramon, Walnut Creek, Pleasanton, Alamo, Dublin, or Concord contact Paul (925) 963-4226

From Owen Hennefer, our in-house lender:

Indymac yesterday completed two trades for mortgage-backed securities with Private Investors.

These are the first non-GSE trades in the last 36 days. So, this is a good sign that the panic may be subsiding and private money could bring liquidity back to the mortgage market. I still wouldn't expect a quick turn-around, but it's a start. As things come back it will unfold from quality prime loans first and eventually we'll see some movement in some of the riskier products as they start to open up a bit again. Don't hold your breath for option arms or stated w2 to get aggressive again, but we could see some of the other alt-a products that make sense and have historically performed well come back, but likely at reduced loan-to-value.

People are going to have to be able to afford their home now. That's the new market and that's the mentality you have to embrace to continue to survive this market. The quicker you move to build your business, marketing and clientele around that concept the quicker you will ramp up start to take advantage of what is there.