Post Mortgage Meltdown - Can I get Financing?
The mortgage market and subsequently the entire US economy had a major meltdown in 2008. This originally stemmed from the subprime meltdown, and then the Alt-A lending collapse. As a result, the world financial markets have experienced a major credit crunch and this has resulted in a completely transformed US mortgage industry.
The previous dozen years of mortgage options and financial bliss have become a memory, with every liberal mortgage program no longer available. The remaining mortgage products are quite unlike the guidelines from the past few years. Now...they require full documentation of income, strong credit, and actually proving you have a job! It's no stretch to say that common-sense has returned to the mortgage world.
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.
Aurora, GreenPoint, SunTrust, First Horizon, and IndyMac were leading Alt-A lenders during the mortgage boom of the last decade. Besides these, there were literally hundreds of banks and lenders that delivered niche products to strong borrowers. Unfortunately, many of these lenders are now out of the mortgage business completely.
Post Subprime Meltdown:
As 2008 ends, hundred and hundreds of banks are closed operations. The aggressive loan options that arose over the past decade are now gone, and more than likely will never return. The credit crunch is making it even tougher for average customers seeking home loans to get a loan. FHA is king again, as the only program that lenders are comfortably loaning money towards is the hallmark of the mortgage business -- the FHA loan from the Department of Housing and Urban Development. Credit score requirements are now in the low 700's, where before a 680 was sufficient. Cash-out refinance mortgages on single family homes are very hard to get, and for many people, impossible. HELOC's are being reduced for millions of customers. Additionally, investor loan financing is extremely hard to obtain, no matter how strong the client.
As 2008 comes 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.
The previous dozen years of mortgage options and financial bliss have become a memory, with every liberal mortgage program no longer available. The remaining mortgage products are quite unlike the guidelines from the past few years. Now...they require full documentation of income, strong credit, and actually proving you have a job! It's no stretch to say that common-sense has returned to the mortgage world.
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.
Aurora, GreenPoint, SunTrust, First Horizon, and IndyMac were leading Alt-A lenders during the mortgage boom of the last decade. Besides these, there were literally hundreds of banks and lenders that delivered niche products to strong borrowers. Unfortunately, many of these lenders are now out of the mortgage business completely.
Post Subprime Meltdown:
As 2008 ends, hundred and hundreds of banks are closed operations. The aggressive loan options that arose over the past decade are now gone, and more than likely will never return. The credit crunch is making it even tougher for average customers seeking home loans to get a loan. FHA is king again, as the only program that lenders are comfortably loaning money towards is the hallmark of the mortgage business -- the FHA loan from the Department of Housing and Urban Development. Credit score requirements are now in the low 700's, where before a 680 was sufficient. Cash-out refinance mortgages on single family homes are very hard to get, and for many people, impossible. HELOC's are being reduced for millions of customers. Additionally, investor loan financing is extremely hard to obtain, no matter how strong the client.
As 2008 comes 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.
About the Author:
Learn more about Peachtree City mortgage and Atlanta mortgage from Brian and the team at Anderson Lending Group
posted by Debt Consolidation Loan at
1:59 AM
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