September 5, 2008

Just when I thought the week would go by with no program changes ……….

Investors have pulled back on FHA and Conventional on the use of ‘alternate credit’. This means that if a consumer does not have 12 months of established history in the US, to generate credit scores, then they potentially will not be able to get a loan. This is potentially huge for relocating employees from overseas. Mind you, there may be no problem if the employee goes through some of the larger relocation companies. Just be sure they are pre-approved before you get under contract. One of our larger 2nd lien lenders made a new guideline that borrowers have to have 1 year with the same company to get approved. That was a new one. I have not seen that in about 11 years. Usually, as long as you are in the same industry for 2 years, but employed , it shows you are employable. And finally, our biggest issue continues to be that our investors are implementing policies ‘retroactive’. Gone are the glorious days of 30 days notice. Time to absorb. Gone Gone Gone. Once again, sign of the times. Do I sound like a broken record yet?

Foreclosures. We are sick of hearing about them, I know. But lets talk about reality. 39% of the foreclosures in the US are in CA/FL. Whew! 6.4% of Americans are behind on their mortgage payments, and 2 million homes are currently in foreclosure. Lets just all agree that it is not over yet, and do whatever you can to make your payments on time.

Rates are lower this week. Trending downward. Why? Recession fears due to a 5 year low in the unemployment numbers. Oil prices are down. Merrill Lynch is expected to post a larger than expected 3rd and 4th quarter loss. This is making the stock market go nuts! Good news for bonds, who love bad news. Remember bonds are the safe haven for investors that pull out of the stock market when ‘uncertainty and doom/gloom’ exist.GMAC, one of the top 10 US mortgage lenders, announced that 5,000 layoffs will come by year end. They will continue to originate loans directly to the consumer, but will cease all operations to the wholesale /broker market. Mike Larson, a real estate analyst for Weiss Research quoted to CNN Money this week that “We’re not confronting a credit crisis anymore. We are dealing with broad economic problems that are contributing to delinquency rates”.

Positive News…..yes there really is some! Patriot Bank has one of the most competitive local high yield savings accounts- 4.0% for deposits over $50,000! Call our main branch for details! 713.400.7100