The past week has been one of turmoil and concern for both real estate buyers and sellers. Buyers are finding it difficult to get favorable mortgage terms, and sellers are seeing fewer buyers that qualify to buy, based on stricter underwriting requirements.
THE MEDIA: TV and newspaper stories continue to publish half stories and half truths that confuse. More than a few folks told me that jumbo loans, those in excess of $417,000, could not be had for less than 8.25%. THEY HEARD IT ON THE NEWS! Yesterday, I heard of a reliable source that has jumbo money to lend at 6.25% with “0” points.
The extent of defaulting loans is troublesome, but not to the extent that it has upset the industry, Wall Street, and the global economy. To a large extent, the cascading effect of some people not making house payments has been fomented by the media.
I’ve talked to several smart people about this over the last week. These are lenders, realtors, and investors that have been doing this longer than I have. The concensus of opinion is that it will take about 6 months for things to sort out:
1. It takes time for moves by the Federal Reserve to take effect, but they will need to make more moves to lower the discount rate, AND it will require reductions in the Fed Funds Rate, that which directly affects consumer rates.
2. It takes time and/or a new story for the media to get tired of reporting the same thing
3. It takes time for Wall Street to get over the current jitters with respect to mortgae backed securities.
4. It takes time for the mortgage industry to rewrite and deploy new guidelines which will not punish good borrowers, yet keep weak borrowers from getting into loan programs they cannot afford.
Ken Harney wrote one his great articles for The Seattle Times Saturday edition: “Fallout From Mortgage Mess.”
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Comments 1
The scary stuff always sells better.
One thing is for certain; if you are interviewed by the media, they will only report half of what you say, and it will always be the negative side.
If you are approached by the media, your best bet might be to decline an interview. Anything you say will be twisted, exaggerated, or spun the wrong way.