Post on 13-Jun-2015
Mortgage Market Meltdown
What it Means to You
[Your Full Name][Your Company Name]
Mortgage Market Meltdown
Perfect Storm
Mortgage Market Meltdown
Key Determining Factors
Subprime and Alt-A Lending
Alt-A consists of reduced and No-Doc
Accounted for 40%-70% of loans in 2005-06
Investor appetite brings loose underwriting Everybody gets a loan
Liquidity crisis hits subprime December ’06 Maybe everybody can’t pay it back…
Mortgage Market Meltdown
The Role of Mortgage-Backed Securities
Most loans are sold as securities
Investors accept risk with reward
Delinquencies mount; risk outweighs reward Keep your loans – we don’t want them! If I take them – I’ll pay you less! American Home & others can’t cover losses
Mortgage Market Meltdown
Results
Underwriting guidelines based on historical data, including rising prices
Consumer maxed-out and unable to repay
No more equity to support spending habits
“Officer and a Gentleman” loans
Mortgage Market Meltdown
What’s Next For Real Estate
Fewer potential buyers
Increasing inventory
Increasing foreclosures
Increased pricing pressure
Mortgage Market Meltdown
Borrowers Who Are Impacted
Caught in contagion: Non-Conforming Stated income/asset borrowers Alt-A No-doc Loans
Still free to roam: Conforming and Gov’t Vanilla Fannie Mae: Full-doc type Some stated deals still exist FHA & VA Don’t get too comfortable
Mortgage Market Meltdown
Critical QuestionWhat would your life be like if
you didn’t sell your home in the next 12 months?
Mortgage Market Meltdown
It Doesn’t Have to Be This Way
There are opportunities
Sellers
Buyers & Investors
Mortgage Market Meltdown
Action Steps for Sellers
Get real about price
Consider seller-held seconds
Beware of the non pre-approved buyer
Get your financial house in order
Mortgage Market Meltdown
Action Steps for Buyers
100% financing programs have seen severe cutbacks
PMI: not so bad & possibly deductible
Get your credit in order
Get your docs in order Tax returns, bank statements, pay stubs
Mortgage Market Meltdown
Not a Buyer or Seller Just Yet?
Still critical to make sure credit is in order now
Allows time to fix anything before you do become a buyer
Make sure you know what kind of loan you have now – grab your closing docs and review with trusted mortgage professional
Mortgage Market Meltdown
FICO Scores Rule the Land
720, 680, and 620 scores.That means exceptions (and Elvis)have left the building
Credit repair is paramount
Routine credit monitoring – annual review Start credit review process 3-6 months in
advance
Mortgage Market Meltdown
Full Doc is Back With a Vengeance
Many lenders have killed Stated/No Doc
Where available, it’s more expensive
Provable income, assets, and good credit
Mortgage Market Meltdown
Partnerships Are Critical
Not the time to shop lenders!
You need one “go-to” lender Wide array of available product Expert in underwriting “Credit analysis and repair” partnerships Local and accountable
Mortgage Market Meltdown
Future Possibilities
Subprime was 12.75% of all 2006 loans
There is still massive opportunity here!
Keep your head up
Mortgage Market Meltdown
Get Prepared
Sellers Choose the right Realtor! Educated sellers set realistic prices Get your house in order – Best Shape/Right Price Work only with Pre-Approved Buyers
Buyers Due diligence Don’t be a cab driver Real Estate investors: Cultivate relationships
Mortgage Market Meltdown
Next Steps
Seller Action Meetings Expect Realtor to provide realistic information –
you may not like what you’ll hear Risk analysis meeting involving lender How willing are you to navigate troubled waters? Demand Realtor to promote your home to
aggressive Buyers Agents
Buyer Action Meetings Pick the right lender Get pre-approved not pre-qualified Be realistic with sellers Have your Realtor aggressively promote you to
other selling agents