Once a week I will feature a spot from our in-house lender, The Mortgage Advantage. This week they will discuss the latest shakeup in the Mortgage Industry.
Home Buyers that had loans with First Magnus, Great Southwest and all of their affiliates were left at the closing tables unable to get their keys because of lack of funds. And Countrywide accessed their entire credit line of 11.8 billion dollars. What is going on? All banks/lenders use credit lines to fund loans and wait for their investors to replenish the lines. If the loans are "agency”, Fannie Mae, Freddie Mac (conforming loan limits under $417,000), VA, FHA, as long as the loans meet their guidelines the credit lines get replenished quickly. Here's the rub... all loans over $417,000, home equity or purchase money seconds, non agency stated, option arms, quirky loans are now homeless. The investors of these programs have limped off into the sunset and have left these loans sitting on Countrywide’s, First Magnus, Great Southwest, and all of the other lenders that did non-agency loans, credit lines. First Magnus just ran out of money. Many lenders utilize Countrywide's programs and if Countrywide cannot fund their credit lines then they will not be able to replenish the other lenders that use their programs. Ouch! Will the Feds step in and save Countrywide if necessary?
FYI: After Thursday's global market turmoil, Uncle Ben and his crew dropped the primary discount rate, not the all important Fed funds rate, which affects all banks’ cost of funds. A discount rate cut only lowers the cost of emergency borrowing by institutions in distress. This was more a psychological move to tell the markets that the Feds are paying attention.
The Mortgage Advantage, Inc. is going strong! We have been in business for 12+ years and we are so grateful to our great leader/owner and all of our team and clients that have helped build our company. Thank you!
Ask us about our "911 Rescue" for your loan transactions!
Submitted by: Harold Perkins / The Mortgage Advantage, Inc.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment