State of the Mortgage Market

By Ryan Jensen, The Jensen Group

In the media, there is still a lot of press regarding the recent struggles of the lending, and more specifically, the subprime lending industry. It is true that a number of subprime lenders who allowed their guidelines to become rather lax and flexible to qualify more buyers are now taking some hits. Foreclosures are causing cash flow problems and mismanagement has forced a number of lenders to close their doors. Although this is not the end of the world and the whole situation has been a bit overplayed in some aspects, there are some effects this will have on the market for awhile and it is worth watching for any home owner, or would be home owner.

Here are a few updates for those following these events.

·         According to a recent Seattle Times article, foreclosures around the country have risen 47%. This means a large number of homes coming back on the market and lenders holding these mortgages are being overwhelmed by the increased volume, causing some to go under. By the way, foreclosures in Washington State actually bucked the national trend and DROPPED 5.9%, while appreciation has still been in the double digits.

·         Lending guidelines are more restrictive than they were in previous years. 100% financing is still available, but requires generally at least a 680 credit score or higher and difficult to get with stated income. The secondary market for buying 100% loans has just shrunk at this point. Subprime lenders have also risen their rates considerable to adjust for risk.

·          At the urging of the federal government, some banks are now looking at restructuring loans they are servicing for at risk borrowers or borrowers looking at foreclosure in an effort to prevent default. Washington Mutual is looking at earmarking as much as $2 billion for such an undertaking.

·         Despite all the hub-bub, good rates are still available. With 0 discount points, a 30 year fixed can be as low as 5.75%.   

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