Feb 29 2008
“the pendulum swings”
We are all aware of the the changes and hysteria in the mortgage business lately. There are over 200 mortgage companies / investors out of business in the last twelve months. B paper is gone, no income is gone, stated income is for the most part gone, 100% financing is seriously hampered or gone in the conventional market, negative amortization is highly regulated or gone and low credit scores, if they can get a loan, will pay dearly for it.
The big question is will they stay gone? In the past we have had many cycles of the market getting tough and the pendulum swinging in the opposite direction. Then the market improves and the pendulum swings back.
What is different this time? This time the changes that the industry is making to police ourselves is having, for the first time, legislation following the changes to make sure we don’t let the pendulum swing back to where we were. All the programs I highlighted above, if they come back, will be shadows of what they use to be.
People hanging on waiting for the old days to come back will be sadly disappointed. If you are a lender, Realtor or buyer you must begin to position yourself for this new market. How do you do that? Improve your credit score, save money and start reporting your income on your taxes. To some I know that sounds brutal but if you want to see brutal look at the foreclosure figures for the country.