Now that Wall Street are not buying subprime loans the layoffs were inevitable! This economic move makes sense for companies that either change guidelines or went under and weeds out the industry. Its going to take 4-6 months for Wall Street to buy short term notes in the form of 3,5,7, and 10/1 mortgage notes. Wall Street isn’t interested in buying those subprime products 2/28, 3/27, 2/38, or those crazy pay option arms, etc. They want the “a & b” paper right now. My friend sells mortgage notes and gives me insight within his profession. As subprime quickly dries up “a paper clients” will be rewarded with great pricing on all products! I am seeing signs of this with the 30 year fix bank are offering in retail- 6.000-6.375 @ 0-.125 points to “a paper home owners.” ING wholesale sales 3 products and have no problem selling their notes on Wall Street when you compare their products (5, 7, and helocs) to any central bank pricing in retail or wholesale!

POLITICIANS- They do not know what they’re talking about on the mortgage issue! Even if they allow Fannie Mae or Freddie Mac to increase the loan size to fix the problem, consumers facing foreclosure want qualify unless they can go SIVA to get a FHA loan! And if Fannie & Freddie can buy more notes with an increase to their cap, they will be buying notes that are adjustable or adjusted where the consumer can’t qualify to refi to begin with! Fannie & Freddie balance sheet will have a foreclosure REO like Countrywide! The Fed already knows this.

Wholesale want go away but “c-paper” has disappear. Countrywide use to offer HUGE jumbo loans! Now they want dare lend over 2 million wirh 30 % down! A sign of the times. Finance major speaking hear before mortgage advisor and I could go on and on about where the overall market is going. But I’ll tell you this! I am not selling prepay to my “a paper” clients because I want them to be in a position to refi in 4-6 months because I think rates will drop .75-1.00% on all products being offered now.

Herb

Jeremy – Thanks for your contributions. One of my favorite sayings is that “where there’s panic, there’s opportunity” there are a ton of niches that are really going like crazy (REO, foreclosure stuff mainly) that those positioned properly for the fall are doing very well. It’s important to look for opportunities in relevant areas of the overall business of real estate finance.

Ann- I am waiting to see the first big lender to announce 100% cessation of wholesale lending (and not due to pending implosion like IMPAC, but a strategic move away from wholesale) that will be the day when people who are barely making it by really freak out.

– Morgan

This blog is excellent. Dittos to Morgan.

Yes, there are nasty people at each other’s throats all over the place.

But like a favorite underwriter of mine said, the greedy people who got into this business in the last five years will go back to what they were doing before, being bartenders and used car salesmen.

What I’m fearing is inflationary pressures. The Dollar is tanking and people are pouring their money into gold. This will keep bond rates HIGH to make them more atrractive, thus rates will continue to climb. This could also pressure the Fed to hike up prime again.

It just scared me yesterday that we had 3 mid-day price changes, all for the worse.

Ann, the you’re right about the retail and laying off, but if you go retail, aren’t the rates higher? WAMU is actually closing their retail center here in San Diego in November, but they are keeping their wholesale center open….so far!

Jeremy, you last paragraph is timely. I’m with a full brokerage (I can do real estate too). I’m taking advantage of all my networking and some of the networking organizations. If you can do a conforming loan with a down payment, loans are a snap. I still think that is good for first time home buyers with reasonable expectations, ie start with a decent 2-bedroom condos.

The problem is that know-nothing greed meisters took over a 5 years ago and the gravy train is now at the glue factory.

There’s still business out there, but people need to get back to basics: Keep your client’s best interests in mind and provide stellar customer service, while continually educating yourself and keep up with the latest technology.

Jeremy, you are right about the rates, they are still Killer Low. Hey, I was in high school when prime was at something like 21.5 percent when Paul Volker shot up the rates because we had 18% inflation and gold was at $800 an ounce.

I’ll shut up now.

Ann – you are probably right. Congressman and Senators – especially those who are approaching an election year – are looking to make the housing and mortgage market a platform on which to run. It happened here in OH last year. They need someone to blame, and who is the easy target? Can’t blame that guy working at Jiffy Lube that bought a $750k house on no doc, can you? It’s not his fault, right? Someone had a gun to his head, obviously.

I still say we just need to take advantage of the market that is there. Get involved in organizations for realtors and real estate investors. A bad foreclosre market means it is a great foreclosure buyout market! Get lined up with someone that can help you close those. And typically those borrowers are qualified and intelligent.