REDDING HIGH END HOME SALES STAGNATE
FHA LOANS, HOME LOANS, INDUSTRY NEWS, REAL ESTATE LEGISLATION, TIPS FOR BUYERS, TIPS FOR SELLERS, TIPS FOR SENIORS
September 14th, 2008
My broker, who makes it a point to continually monitor local market statistics, shared August sales report data with me this fine Saturday morning. Immediately noticeable was the lack of sales above $650,000. That’s right, not one sale above $650,000. Why?
Mortgage money for jumbo loans is difficult to get. Anecdotal evidence indicates loans for well-qualified borrowers, even with large downpayments, are hard to get approved. I spoke with a Marin County loan broker who was trying to get a $1,000,000 loan approved for a buyer that was buying a $2,000,000 home. Yes, the borrower was putting 50% down and borrowing 50% through the mortgage broker. The loan had been sitting in underwriting for three weeks, pending approval.
Yesterday, I called a local escrow officer to see if loan documents arrived on a sale in which I represent the buyer. The escrow officer said she has a huge stack of files awaiting loan documents. Many lenders have pared back staff to a minimum and in some cases loan officers are doing their loan processing as well. When I spoke to the loan officer, in this particular case, about what was holding things up, he said many conventional loans being processed at his Sunnyvale branch of Wells Fargo were being switched over to FHA loans. Why? The recent take over of Fannie Mae/Freddie Mac has created uncertainties in financial markets where these loans are typically sold.
Banks making loans today want to make sure they have a place to sell these loans tomorrow. If they can’t unload these loans and recoup their capital, they will have serious liquidity issues and will cease making loans. This has resulted in lenders dragging their feet to get loans approved until they have a better idea what the future holds. I can sense the tension and frustration loan officers feel right now as they try to please their clients while having to deal with nervous underwriters that are under pressure to approve only the most qualified borrowers.
Buyers should make an extra effort to not just get prequalified (which is nothing more than the loan officers opinion), but preapproved for a mortgage loan (where the underwriter, who has the final say, grants official approval), before making a purchase offer. Underwriting rules are changing rapidly and loan officers are finding it difficult to stay current. Once the dust settles with regard to the implementation of the housing recovery bill (HR 3221) and the take over of Fannie/Freddie, things should get back to something resembling normalcy. Don’t expect 100% loans or stated income loans to be available to anyone but the purest “gold plated” borrowers.
Contact me if you are seeking expert real estate counseling, whether buying or selling:
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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