The subprime meltdown and the subsequent credit crunch have completely transformed the US mortgage industry.
The past decade has become a distant memory, with almost all financing options beyond conservative "vanilla" 30-year fixed and 15-year fixed loans no longer available. The remaining mortgage products demand full proof of income, excellent credit, and a history of stable employment. Wow....these new rules are in reality just a return to the previous mortgage guidelines that existed before the mortgage market exploded with creative options.
After the Subprime Disaster:
Before the much discussed mortgage meltodown, 100% financing was available for virtually everyone. If you had a pulse, you could get 100% financing regardless of past credit. Today in November 2008, there are no longer any options for 100% financing available outside of VA and USDA loans. If anyone tells you differently, they are leading you astray. These do not exist at this time.
Alt-A loans, which used to offer aggressive loan financing products catering to borrowers with credit scores from 660 and up are also gone. While these lenders offered programs to borrowers with scores down to 620, the aggressive programs were typically not available to borrowers below a 660 middle score. Alt-A banks have driven the creation of innovative loan products over the last five years. Today, even these seemingly viable products have dried up. They were a victim of the mortgage chaos that ensued during the subprime meltdown. Anderson Lending Group does not offer these loans any longer. Alt-A lenders had relaxed debt-to-income ratios, reduced income documentations (stated income, no income / no asset, and no doc), and the ability to add interest-only to most products. Alt-A lenders were the ones that popularized the use of 80-10 and 80-15 loans for investors to avoid PMI.
Some examples of leading Alt-A lenders were Aurora, GreenPoint, SunTrust, First Horizon, and IndyMac. Besides these, there were literally hundreds and hundreds of lenders that emerged to fill certain niches. Many of these lenders are out of business, while others have just eliminated the Alt-A product line.
After the Subprime Chaos:
Over 300 banks and other mortgage lenders have either closed down or exited the mortgage business. All of the aggressive financing options that sprouted up over the past 8 years are now gone. We are back to FHA and Conventional loans only, with an added twist. The credit crunch is making it even tougher for a normal, gainfully employed borrower to get a loan. Credit score requirements are now in the low 700's, where before a 680 was sufficient. Cash-out refinance loans are very hard to get. Home equity lines are being reduced, or even closed by the lender. This is happening to qualified borrowers, not just customers with borderline credit and income. Additionally, investor financing is extremely hard to obtain, regardless of income or credit.
As 2008 comes to an end, home loans are still very hard to obtain. Fannie Mae and Freddie Mac have imposed stricter guidelines effective December 1st, 2008. These guidelines will further restrict the ability to obtain mortgages for many poeple. There are extremely tight restrictions now placed on home loan customers --- such as limiting the number of properties financed, the addition of new, more stringent credit requirements, and much to the detriment of borrowers with past credit blemishes, there are new rules and restrictions for borrowers who have had a past bankruptcy and/or foreclosure. - 16003
The past decade has become a distant memory, with almost all financing options beyond conservative "vanilla" 30-year fixed and 15-year fixed loans no longer available. The remaining mortgage products demand full proof of income, excellent credit, and a history of stable employment. Wow....these new rules are in reality just a return to the previous mortgage guidelines that existed before the mortgage market exploded with creative options.
After the Subprime Disaster:
Before the much discussed mortgage meltodown, 100% financing was available for virtually everyone. If you had a pulse, you could get 100% financing regardless of past credit. Today in November 2008, there are no longer any options for 100% financing available outside of VA and USDA loans. If anyone tells you differently, they are leading you astray. These do not exist at this time.
Alt-A loans, which used to offer aggressive loan financing products catering to borrowers with credit scores from 660 and up are also gone. While these lenders offered programs to borrowers with scores down to 620, the aggressive programs were typically not available to borrowers below a 660 middle score. Alt-A banks have driven the creation of innovative loan products over the last five years. Today, even these seemingly viable products have dried up. They were a victim of the mortgage chaos that ensued during the subprime meltdown. Anderson Lending Group does not offer these loans any longer. Alt-A lenders had relaxed debt-to-income ratios, reduced income documentations (stated income, no income / no asset, and no doc), and the ability to add interest-only to most products. Alt-A lenders were the ones that popularized the use of 80-10 and 80-15 loans for investors to avoid PMI.
Some examples of leading Alt-A lenders were Aurora, GreenPoint, SunTrust, First Horizon, and IndyMac. Besides these, there were literally hundreds and hundreds of lenders that emerged to fill certain niches. Many of these lenders are out of business, while others have just eliminated the Alt-A product line.
After the Subprime Chaos:
Over 300 banks and other mortgage lenders have either closed down or exited the mortgage business. All of the aggressive financing options that sprouted up over the past 8 years are now gone. We are back to FHA and Conventional loans only, with an added twist. The credit crunch is making it even tougher for a normal, gainfully employed borrower to get a loan. Credit score requirements are now in the low 700's, where before a 680 was sufficient. Cash-out refinance loans are very hard to get. Home equity lines are being reduced, or even closed by the lender. This is happening to qualified borrowers, not just customers with borderline credit and income. Additionally, investor financing is extremely hard to obtain, regardless of income or credit.
As 2008 comes to an end, home loans are still very hard to obtain. Fannie Mae and Freddie Mac have imposed stricter guidelines effective December 1st, 2008. These guidelines will further restrict the ability to obtain mortgages for many poeple. There are extremely tight restrictions now placed on home loan customers --- such as limiting the number of properties financed, the addition of new, more stringent credit requirements, and much to the detriment of borrowers with past credit blemishes, there are new rules and restrictions for borrowers who have had a past bankruptcy and/or foreclosure. - 16003
About the Author:
Brian Anderson Anderson Lending Group Before you select a mortgage loan, be sure to investigate Atlanta Mortgage options from Anderson Lending Group.
