The Mortgage Marketplace

In light of the current market situation I would like to shed some light on the current lending marketplace. Over the past few months many banks have closed their doors. Over the past few days, a few other banks, Prime and Sub-Prime, have frozen their pipelines, and their future remains uncertain. Essentially, some banks are facing what we call a liquidity crisis. This means that they are holding loans on their warehouse lines that they cannot sell. A warehouse line is like a gigantic credit card which banks use to fund their loans - they later sell them off to investors in bulk. When these banks are stuck with millions of dollars of un-sellable loans, what are they to do? They take a loss, and get the loans off of their line. This loss often times is what shuts bank doors overnight. Now, when you see banks freeze their pipelines, they are essentially stepping away from the table to analyzing how to react to the situation. Some, then, choose not to return. Make sense?

As for rates, you have all seen rates skyrocket in recent weeks and not follow any correlation to the bond yields. Why? The tags on various loan products are tied to risk factors. The risk factors have increased recently, and this is due to the increase in defaults. Investors are demanding more return and a higher yield for the increase of risk they are assuming. Thus, higher risk means higher rates.

What does this mean? If you are considering refinancing or purchasing a home, you should get it started sooner than later. Programs and guidelines in place today, may not be tomorrow.

Fortunately, I have so many lending options that I am your best resource for your mortgage needs. If you are refinancing, call me today so that we can lock a rate. If you are in the market to purchase a home, call me so that we can lock a rate for 60 or 90 days (even without a property under contract) to take advantage of today’s rates and available programs.

Looking forward to working with you!

Eric Whang
Senior Loan Consultant
UNITED AMERICAN MORTGAGE
800.708.5626 ext 107
949.250.1300 ext 107