For the past three months, I have had trouble placing my borrowers in either the same or a better position then they were currently in. I have see lender raise there guidelines on borrowers that qualified for homes 3 years ago with no changes to their credit currently are unable to refinance due to FICO score requirements rising and LTV (Loan to Value) requirements steadily decreasing.

I feel that this trend will stay the same for the next 2-3 years or until profits have come back for residential lenders. The moral of this story for now is, if you are thinking of refinancing or purchasing a home. You need to do it now, because the future looks bleak.

The following are a few examples of problems in the mortgage industry:

2007-02-13: Will NFI Weather the Storm? (readers alert on NFI's robustness)

2007-02-13: ResMAE Files Chapter 11 (Added to the list, with the caveat that Credit Suisse is keeping their operations going)

2007-02-12: Merrill Loaded for Bear in Mortgage Market That Humiliated HSBC (Another MLIOM mention!)

2007-02-12: Bloomberg: Implode-O-Meter vs. "Buy The Dip" Analyst

2007-02-12: Pending Foreclosures Climb Dramatically in January ("We're not through yet with the after-effects of all the people who used creative financing to buy homes beyond their means"—but somehow the "worst is over"?)

2007-02-12: Study: 70 Percent of Early Payment Defaults Linked to Fraud (Shameful.)

2007-02-12: Fremont Nixes 2nd Lien Origination; Cuts Back AA (A "semi-plosion" with much the same effect on the market)

2007-02-10: Subprime Hits a Wall (Merrill Doing B&C Margin Calls) (Bad in general but also exacerbates the New Century situation)

2007-02-10: Wall Street growing leery of high-risk mortgages (Ya think?)

2007-02-09: FirstFed Financial Corp. Breaks Down To A 3 Month Low (This one's a real gem: "80% of its loans have little or no documentation... negative amortization constituted $223.9 million, or 68.4%, of the bank's income" --BusinessWeek)

2007-02-09: Shares of NovaStar Slide to 2002 Levels (Can someone prove to me that NFI's write-downs won't exceed their $500mln in "tangible" assets (and less, liquid)?)

2007-02-09: New Century Continues Plunge (11 new shareholder lawsuits, at my last count.)

2007-02-09: Subprime Time Bomb (From the perspective of the banking industry...)

2007-02-09: BrokerUniverse - "What We're Hearing" ("In some quarters it's being called a liquidity crisis, the likes that haven't been seen in the subprime sector since 1998...")

2007-02-09: Questioning Sell-Side Research On The Subprime Lenders (What was Wall Street thinking? We get a hat-tip in this piece.)

2007-02-09: ...

For the past 3 months their has been an increase in equity deterioration for California homeowners. One of the problems that I have seen causing this situation is investors that purchased the properties at a lower price are dumping these properties for less than the market price. When someone wants to take a loan out in the immediate area the banks want to see what the homes have been selling for.
The banks get this information from appraisers who get some of their information from the MLS (Multiple Listing Service). When the appraiser looks on the MLS and sees that a comparable home has been soon within the immediate area for less, he notes it in his/her appraisal. The bank will only lend based on the findings of the appraisers report.
Investors dumping homes has really affected homeowners that would like to either sale or refinance their properties. Due to the instability in the market the banks have become very strict with the acceptance of value from reputable appraisers. This is called a Desk Review. This is when the bank reviews the appraisals and counter offers the value of the property. The Bank wants to protect their position, so the value that they come up with is far below what your average appraiser would come up with. Until, the real estate market becomes more stable a lot of home owners will be impacted by these practices.

If you would like to see where the value of your home is give Gary Martin a call at (909)717-2013

In the last six months with housing prices dropping and the foreclosure rate rising there has been a shake up in private lending. A lot of these same residential mortgage lenders were offspring of the refinance boom two to three years ago. Now mortgage professional hands are tied when they try to refinance their past client due to loan program either going away or increased documentation requirements.

The following is an example of guideline changes:

Loan Scenario 2005--------------------------Loan Scenario 2007

$300,000 Loan Amount------------------------$300,000 Loan Amount
80/20 Combo Loan Program--------------------80/20 Combo Loan Program
100% CLTV (Combined Loan to Value)----------100% CLTV(Combined Loan to Value)
SISA (Stated Income/ Stated Assets)---------SIVA (State Income Verified Assets)
580 FICO (Credit Score)---------------------640 FICO (Credit Score)

As you can see with the above example lenders have raised the credit score requirement up to 60 points with verified assets. The verified asset requirement for
lenders can range from 2-9 months of P&I (Principal & Interest) payments.

Don't get me wrong there are still incredible alternative documentation loan programs
still in existence, but if you are thinking about refinancing your home. You need to do something while you still may have options.


If you would like to go over your particular loan scenario contact Gary Martin at (909)717-2013

Many people have been stuck in your same situation. Usually, the problem lies with income documentation or past credit issues. In today's economy it is very hard to be a conventional client. Many of my personal clients have multiple streams of income. In order for you to go into an institution they usually want 30% for a down payment and a steady well documented income. There are currently lender's that will focus more on the entire loan scenario to see if it fits there lending objectives. These lender's think outside of the box for example, they will lend 90% LTV (Loan to Value) with a 660 FICO score up to a loan amount of $2,000,000.


If you are currently in need of a residential loan from $800,000 to $10,000,000.
Give Gary Martin a call at (909)717-2013 or you can apply using our online mortgage application at http://www.needabetterloan.com