Why is this happening?
There is a liquidity crisis in the secondary market where loans are sold. The investors who buy loans in the secondary market have virtually stopped buying nonconforming loans. This doesn’t just mean bad credit or stated income loans- this also means jumbo loans- any loan over $417,000. Due to the price of homes, most loans in Marin County are above $417,000. Yes, these mortgage troubles impact Marin! These loans , which are difficult to sell on the secondary market , are causing a liquidity crisis. Lenders are over compensating and raising rates and implementing restrictions which make it more difficult for borrowers to get a loan.
What does this all mean to you?
If you are purchasing a home or refinancing, this is not a time to be looking for a deal. Work with a reputable, established mortgage broker who can make sure your loan funds. If it doesn’t fund, it is not a good deal!
Talk to your real estate advisor about loan contingencies, and what they mean if your lender can’t fund the loan. You don’t want to be in the situation that you can lose your earnest money. If you don’t close on time, the seller could have a right to that money.
Sellers have gotten spoiled in the last few years, looking only at the sales price offered. Sellers need to be looking at financing terms as well. If you need to sell, it might be worthwhile to take a lesser priced offer with stronger financing terms than a higher priced offer with a loan program that is risky and could be difficult to fund.
No, the sky is not falling.Â They say the devil is in the details- now is the time to be examining the details as it relates to the mortgage industry to make sure you don’t get burned.