720+ credit score

75% LTV

Purchase or Rate and Term Refinance

Loan Amounts between $150,000 and $417,000

Your wholesale rate for today with 1 origination point:  5.25%

The past decade has become a distant memory, with almost all financing options beyond conservative “vanilla” 30-year fixed and 15-year fixed loans no longer available. The remaining mortgage products demand full proof of income, excellent credit, and a history of stable employment. Wow….these new rules are in reality just a return to the previous mortgage guidelines that existed before the mortgage market exploded with creative options.

Post Mortgage Meltdown:

Before the mortgage meltodown, 100% loan financing was available for almost every borrower. If you could prove you were a citizen, you could get 100% financing regardless of past credit. Today in late 2008, there are no longer any options for 100% financing available outside of VA and USDA loans. If anyone tells you differently, they are leading you astray. These do not exist at this time. Investors have decided that they will not buy any mortgage loans where the borrower does not have a sizable down payment or existing equity in their loan.

Alt-A loans , which used to deliver high LTV and low documentation mortgage financing catering to borrowers with credit scores from 620 and up have disappeared. Alt-A banks drove the creation and marketing through an army of mortgage brokers a series of innovative loan products, most introduced in the past five years. While these products were often sold to very strong borrowers with significant assets who couldn’t prove income, these seemingly viable products have dried up. They were a victim of the credit tightening that ensued during the subprime mortgage meltdown. Secondary investors ceased buying these products, forcing mortgage companies to stop selling them. Alt-A lenders had ease to qualify, high DTI ratios, reduced income documentations, and the ability to add interest-only to most products. Alt-A lenders were the first lenders that popularized the use of 80-10 and 80-15 loans “piggy-back” loans for investors to avoid PMI.

Some examples of leading Alt-A lenders were Aurora, GreenPoint, SunTrust, First Horizon, and IndyMac. Besides these, there were literally hundreds and hundreds of lenders that emerged to fill certain niches. Many of these lenders are out of business, while others have just eliminated the Alt-A product line.

After the Subprime Chaos:

Over 300 banks and other mortgage lenders have either closed down or exited the mortgage business. All of the aggressive financing options that sprouted up over the past 8 years are now gone. We are back to FHA and Conventional loans only, with an added twist. The credit crunch is making it even tougher for a normal, gainfully employed borrower to get a loan. Credit score requirements are now in the low 700’s, where before a 680 was sufficient. Cash-out refinance loans are very hard to get. Home equity lines are being reduced, or even closed by the lender. This is happening to qualified borrowers, not just customers with borderline credit and income. Additionally, investor financing is extremely hard to obtain, regardless of income or credit.

As 2008 came to an end, home loans are still very hard to obtain. Fannie Mae and Freddie Mac have imposed stricter guidelines effective December 1st, 2008. These guidelines will further restrict the ability to obtain mortgages for many poeple. There are extremely tight restrictions now placed on home loan customers — such as limiting the number of properties financed, the addition of new, more stringent credit requirements, and much to the detriment of borrowers with past credit blemishes, there are new rules and restrictions for borrowers who have had a past bankruptcy and/or foreclosure.  While 2009, does show some signs of loosened credit, it will be several years before we recover from this mortgage nightmare.

The reality is that the deals available today will make people rich – extremely rich.  Properties are selling for 25-40% on the dollar……unprecedented discounting.
If you are interested in bulk property purchasing, we can help you do to our direct lender relationships including REO departments.

Caller:  Hi…My name is XXXX and I’m looking for loan to buy a new house (or beach house, mountain house, investment property) this month.

Me:  Great!  We’d love to help.  Tell me more about what you are looking to do.  How’s your credit?  How much are you putting down?

Caller:  My credit is Ok.  I think it is the high 600’s.  I can put 20% down.

Me:  Ok.  We’ll get you approved, but the reality is we should look to see how we can raise your credit score a little bit.  In many cases, we can pay down a little bit of your revolving debt, and gain 40-50 points on your score.

Caller:  That’s great.  Let me make a list of what I owe and we can review.   Oh…also, I own my own business and need to go “stated”.

Me:  Silence……..

Me:  Unfortunately the stated, no ratio, and no documentation programs are all gone.  As well know, the changes in the mortgage market as a result of the subprime meltdown are dramatic.  Even for someone with an 800 credit score, you absolutely must document your income.

Caller:  Ok….I file my taxes, but only claim a small amount of money each year.

Me:  Let’s see what we can do with your real income, debts, and what you are looking to buy.

It may take another year or two, but eventually the word will get out that stated loans are gone.  In my opinion, we will not see this product back on the residential side for many years to come.  While stated loans are not the sole reason for the subprime crises, the reality is that stated loans are viewed as a big part of the problem that has devasted our financial markets.