One of the mortgage brokers that I work with frequently called me, she has been receiving updates from lenders regarding sub-prime lending. The most recent updates include information on the programs that were utilized regularly last year. Most of those programs are no longer available or have made qualifying for these programs more difficult. She also told me that many of the lenders who used to offer sub prime lending are no longer in business or soon to cease operations.
As the first quarter of 2007 is coming to a close the changes in the sub prime market are evident. Wells Fargo, the largest sub prime lender, said Wednesday that it is cutting 320 sub prime jobs in Fort Mill, S.C. and Concord, Calif., saying loan volume may decline following a Feb. 16 tightening of its lending policies according to Jonathan Stempel of Reuters. In addition to Wells Fargo, I was especially surprised to see that Option One who is owned by H & R Block one of the companies that is for sale.
This is going to mean big changes for realtors and how we do business. Realtors who work primarily with first time buyers are going to need to learn new ways to qualify their clients and there may be more counseling of young buyers to get them prepared. I doubt if we will see as many 100% financed purchases, although I don’t think that is a bad thing. We will see more responsible lending for sure and buyers who have to work a lot harder in order to get the house that they want.
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