The mortgage industry has seen drastic changes in the last several weeks that could potentially affect today's homebuyer.

These were caused by the deterioration in the sub-prime market segment that has carried over to the Alt-A segment (good credit borrowers that are using stated income, no documentation, and limited documentation loans). The secondary market (where all lenders package and sell the mortgages they originate to Wall Street) has responded with very few buyers for these types of loans. Mortgage banks have been forced to raise rates on these types of loans and/or stop making them. The only reliable source of mortgage funding for most lending institutions right now are FannieMae and FreddieMac. If a borrower is looking for a loan amount of $417,000 or less (Fannie and Freddie loan limits) and they can document income, they will probably see little or no impact.  If a borrower cannot fully document his or her income they may have trouble obtaining a loan.
 

What can a home buyer do to make sure that they are getting a reliable loan?
 

1. Select a mortgage banker that works directly for a large national bank. Your realtor should be able to give you some referrals with proven track records.
2. Stay in touch with your lender during the home shopping process to make sure that rates and/or loan programs are still what you are expecting.
3. As soon as you go under contract - call your lender and LOCK IN! Once you have locked in your loan program rate and point structure, your funding should be secure even if the loan program is discontinued for future borrowers.

 
Feel free to post questions on this blog, call, or email me if you would like any more information about mortgage financing.
 
Pat Sheplee
Loan Officer
National City Mortgage
patrick.sheplee@ncmc.com
301-580-7709