Gary Morris : The Grapevine is Talking to me Again

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The Grapevine is Talking to me Again

By: Gary Morris
Monday, March 10, 2008 7:43 PM

I heard today, through the grapevine, that 100% conforming loans are going to go bye-bye; that we are going to see lending like it was a few years ago, 95% LTV for conforming loans.

The only way to get a buyer financed at 100% will be to use a FHA loan and one of the gift programs like the Genesis Foundation.

Anybody else's grapevine talking to them?

Comments

Member Since '07	Karen Goodman said: I heard the same thing at our weekly meeting this morning. We have a lender that attends every week and he said the only why that buyers will be able to do 100% financing will be FHA. He also said that a 680 credit score used to be considered good credit, but now it has gone up to a 720. I think this is good for real estate in general, but it is going to make it harder to sell those first-time buyer properties. March 10, 2008 10:10 PM
Member Since '04	Mary Welch said: Gary, I haven't heard alot from the grapevine, but I am hearing the California Raisins singing. Is that a good thing? March 11, 2008 7:16 AM
Member Since '06	Chantal Gakwaya said: I've been hearing the same thing. It's only logical that tighter lending restrictions are going to be here to stay for a while. March 11, 2008 8:05 AM
Member Since '07	Gary Morris said: Mary, when you listen to the Raisins, you are getting old news...they have been out in the sun too long and their brains are wrinkled. The grapevine gives you fresh news. Sometimes though, I am not sure if it is the grapevine speaking to me or Jack (Daniels). Back to the subject. I think the tightening of conforming loans made by lenders is meant to move much of the responsibility to government backed loans (FHA) and help the banks figure things out and get their ducks in a row again. I think I am right when I say that FHA is not so much credit score driven as the banks are. Karen mentions that a 720 score now is considered good...how many home buyers have you had in the last year with a 720? How many of you buyers had a 620+ and could really afford a home? I think FHA looks more at DTI and a borrowers true ability to repay the debt. Have a great selling day! March 11, 2008 9:39 AM
Member Since '03	Gregory Bain said: Gary, It's all smoke and mirrors. The stock market is taking off right now in the latest attempt to save the big mortgage brokers and keep the debt on the dumb consumer. LTV changes with the market. The tour bus Vance and Bill posted will be running for a long time. March 11, 2008 10:59 AM
Member Since '06	Barb Van Stensel said: Gary, Greg is correct that the FHA program is all smoke and mirrors. The tour bus will be in effect probably until late 2010 and the dust is estimated to settle around 2011. With that in mind, the grapevine in my area is pretty similar. Homeowners and buyers will be expecting to pay double on Private Mortgage Insurance. Think about that one?!!!! How easy is it going to be able to sell with 10% down payment unless the purchaser does an 80-10-10 but what is the rate on the 2nd? What will the lesser of two evils be between 80-10-10 and PMI? There is a push for the FHA programs right now but this program has the capacity of creating more problems instead of curing the ones that we have. For instance, the FHA buzz is that the loan amount can exceed the purchase price as well as the value of the building/home! What are we doing here people? Think about negative ARMS and we did the same thing. 100% financing - for those who qualify with one point and a rate right now that I'm being quoted of 6.375% on a 30 year fixed. I think it is about time, but I do believe that a lot of good Realtors already are doing this, making the general public aware of the pros and cons of these programs and what it can ultimately do. What I have been doing is selling bank REO's that are below market and getting a construction loan to get the house back up to snuff and then my client's have a good solid home with few problems to worry about and they an afford that mortgage payment. Waiting to hear your thoughts on that one as there are alot of homes out there that need help and some people just do not qualify any other way - it's a different venue. Beyond that the "fear" has subsided in my neck of the woods. But Vance and Bill are correct, the tour bus will be running for a long time. March 11, 2008 1:23 PM
Member Since '07	Gary Morris said: Hi Barb. I agree with most of what you and Greg say. With the FHA, my experience has been that, yes, the loan amount can exceed the purchase price, but only if an appraisal supports it. Regarding the PMI; that has been another reason I have been using FHA products lately, the insurance is much cheaper than through a conventional lender. My experience with REO's and buyers has been the buyer still expects a move-in ready home for a REO price. If there is work to be done, they don't want to even consider it. Also, I have had buyers look at a REO's price, add the work to be done (with a construction loan) and decide to move on to a higher priced home that needs little or no work. I have shown many REO's with only one sale recently. March 11, 2008 2:13 PM
Member Since '05	Lonn Dugan said: The whole idea of PMI Chaps my little cheeks. Imagine an insurance business that only pays out about 2% of revenue in claims. Pretty sweet? Now imagine a world where if that payout increases to 3%, they can threaten to double the price of the product - and get away with it. OMG.... March 12, 2008 5:27 AM