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Sub Prime & Alt - A Fallout....Worse before it gets better - REALTORS BEWARE!!!!

The subprime market continues to fall.  Although there are a ton of mortgage companies that offer sub-prime and Alt-A products...they all pretty much roll up to the same 4-6 wall street firms.  The problem is when Wall Street decides that it won't accept any more of these loans, then the lender who has that loan that needs to be sold has a major problem.  The loan originator and the realtor have a big problem because their homebuyer has a horrendous problem. 

The American Home Mortgage fiasco is just the latest of the problem companies.  I'm concerned that even though mortgage lenders and brokers say that they can approve these types of loans.  The loans that everyone needs to really think twice about are:

1)  No Income No Asset loans above 90%;

2)  Stated Income Stated Asset loans above 90%;

3)  Stated income verified asset loans above 90%;

4)  No Doc loans above 90% LTV....

Anyway....these are just my pearls of wisdom....Use them wisely...your reputation may be on the line....

 

 

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17 comments • Larry Bettag Illinois FHA Specialist • August 01 2007 09:26PM

Comments

Here's a thought. Why don't Realtors stick to selling houses and lenders to lending money?
Posted by Alan Mills - Creating Closer Communication (ACN) almost 5 years ago
While I tend to agree with Alan a little bit, it is our job as Realtors to make sure that our clients are taken care of through the entire process, not just the house-hunting side. I try my best to keep my nose out of the mortgage side when at all possible, but I'm only really able to do that when I know I'm working with a mortgage broker who's honest and dependable. If I'm at all in the dark about the reputation, I tend to get more involved. We obviously have to be more careful right now than we normally would so I guess I'll be getting more involved on that side than I'd prefer.
Posted by Ryan Hukill - Edmond Realtor® (ShowMeOKC Team of Paradigm AdvantEdge) almost 5 years ago
Thanks Larry.  I just found your blog.  You have some great and informative posts.  It is going to get worse, probably much worse.  In areas like California where it is common to remove your loan contingencies weeks before close of escrow, it could be disastrous for buyers who could lose their earnest money, and for sellers who might lose the deal.
Posted by Ginger Wilcox (Trulia) almost 5 years ago

Ginger....it's crazy right now....we should strap things on....and take a chill pill, because it is going to be a ride.

Posted by Larry Bettag - Cherry Creek Mortgage almost 5 years ago
Ryan...I"m just saying that you'd better be able to refer to someone who will help you and your reputation.  Right now you may love your loan officer, but if the company can't back up your loan officer, then you may ultimately have big issues...
Posted by Larry Bettag - Cherry Creek Mortgage almost 5 years ago
I agree Larry. Like I said, I try to stay back and let the mortgage guys do their thing, but we're going to have to get more hands on now and know more about what's going on at that end of the transaction. Thanks for an informative post.
Posted by Ryan Hukill - Edmond Realtor® (ShowMeOKC Team of Paradigm AdvantEdge) almost 5 years ago
Thanks Ryan...it should never have to be like this, but it's just the market right now...we'll get back to par sometime soon I hope.
Posted by Larry Bettag - Cherry Creek Mortgage almost 5 years ago
Alan....I think that realors need to know who they're dealing with....while your words generally apply, realtors need to be involved now....
Posted by Larry Bettag - Cherry Creek Mortgage almost 5 years ago
"Here's a thought. Why don't Realtors stick to selling houses and lenders to lending money?"  Harsh but true Alan, well said.  This is just the beginning of this mess.
Posted by Generation Mortgage | Reverse Mortgage Bank | (Generation Mortgage - Reverse Mortgage Bank) almost 5 years ago
Problem is that I want my realtor to know who I can trust and who not to.  They're in the business and should know these things....If the realtor doesn't know what kind of business person is he or she....don't agree with you at all Open Home Mortgage....I want a realtor who trusts you and your company.  Hate walking blind.
Posted by Mike Matechi almost 5 years ago

Bottom line continues to be: buyer beware.
(whether you do the walking or let the realtor do the walking for you)
Larry, great post.

Posted by Pete Tsakiris (Countrywide Home Loans a Division of Countrywide Bank, FSB) almost 5 years ago
Thanks Mike....great words
Posted by Larry Bettag - Cherry Creek Mortgage almost 5 years ago
Pete...you're so "on".  How are things in your neck of the woods and thanks for the VM yesterday....always like your abuse.
Posted by Larry Bettag - Cherry Creek Mortgage almost 5 years ago
Thank you very much for the post, there are some good comments. I feel empathy for anyone whose file/transaction didn't get funded at AHM or anywhere else for that matter, I guess if you are in this business long enough we all will have a bad taste in our mouths when a lender says they can do something and then backs out...then your fireman's hat comes out and you have to scramble to hopefully find another lender and you put pressure on them to perform quickly which isn't fair to them since they were not your first choice to begin with.
Posted by Shane Sarae almost 5 years ago
Shane....as a friendly competition, you're always a little excited to see a tough competitor take it in the shins.  However, to have them collapse is horrible.  I hear Countrywide is in desperate times right now.  Their stock has plummeted.  It would be HORRIBLE.....I MEAN HORRIBLE....if the number one lender in north america were to bite it.  I compete with them....but we need them...our industry needs them....
Posted by Larry Bettag - Cherry Creek Mortgage almost 5 years ago

This is all good and bad.  Bad because there is less products we can offer, but good because it will keep the lending industry a little more honest.   Especially those LO's who try to put their clients into homes they really can't afford.

Posted by Pete Castillejos - Hawaii Mortgage Loan and Refinance (808 Home Mortgage, Inc. - NMLS #326138) almost 5 years ago
I agree Pete....Unfortunately this is exactly what our industry needs.  It's too bad that it has come down to this.
Posted by Larry Bettag - Cherry Creek Mortgage almost 5 years ago

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