What's going on with all of these mortgage companies closing?

Is it because the real estate market is crap and people aren't paying their loans and forclosure rates are through the roof?





Can someone explain a little here?What's going on with all of these mortgage companies closing?
about 2 or 3 years ago just about anyone could get approved for a home i was doing 560 credit scores and getting them 100% financing there were basically no guidelines if you had job for 2 years your were approved alot of brokers were shady and would bump up apprasisals, or even forge income docs, or take there borrowers stated and they couldnt never really afford the house they were getting into or puttiing them on ARMs and now all that is coming back and the lenders are loosing money having to buy back these loans so alot are just closing down or going bankrupt its terrible and the lenders that are still around are tightining guidelines in certaint areas Michigan, California,Florida,Indiana so it is basically impossible to get 100%financing even with great credit, i think it will al clear up in a year or so and it will payoff for those who stuck through this messWhat's going on with all of these mortgage companies closing?
foreclosures are at an all time high in most states causing less mortgage loans to flow through. thus mortgage co are forced to close.
Snowball effect. People are not able to refinance, due to low values. Foreclosures tighten bank guidelines. People are not able to purchase, due to tighter guidelines. Most lenders don't know enough people (who know enough people), who are buying homes or that need to refinance. When we do, half won't qualify. Those that qualify are shopping for the lowest price. If we do get a deal, we have to practically do it for free. My company just closed it's doors.
Iceman is right. Some of the problem is due to greedy loan officers but the consumer also has to accept responsibility here. The ';I want it all right now'; mind set that has permeated the mortgage market for a number of years is at least as responsible for current problems. Borrowers got to the point that they would shop for the lender who would give them what they wanted regardless of the risks. I cannot tell you how many loans I lost because I advised people to think long term rather than immediate gratification. But the only person I have to look at in the mirror for the rest of my life is me, so I don't regret it at all, my borrowers are still happily living in homes they could comfortably afford to buy.
I think you're right. The companies extend these huge loans to people who (a lot of the time) barely qualify, and then set them up with adjustable rates. People usually figure the rates will go down, but as we all know, when the rates are handled by the loan holder... they always go up. People are generally overextended with credit, anyway, and when the rates get too high, they simply file for bankruptcy and the mortgages go into foreclosure. Very many foreclosures, and the mortgage companies go belly-up because nobody's paying the bills.
greedy lenders and brokers!


lenders pushed products to borrowers thru the brokers that where not in the best interest of the borrower. most borrowers where misinformed and where not given the whole picture. If they where told when the rate adjusts this is your payment how many do you think would have gone with this typeof product. its unfortunate that brokers didnt look past thier comissions to see what damage they would do to a potential refinance client! I put the blame where it belongs brokers where just plain greedy. and where afraid to tell a client what they could be paying down the road!


Its time brokers concentrate on service and not sales!





they put borrowers into products that had adjustable rates and some put into pay option loans.





adjustabe rate mortgages adjust after a certain term during there term the rates where fixed. ove the last several years the interest rate has gone up. so when borrowers adjustment period came up they found themselves not able to make payments.





the reason for this greed! the guidelines that lenders where using only made the brokers qualify the borrowers at the low fixed rate they started with! so once the rate adjusted the borrower had no chance of making payments at the fully adjusted rate!


pay option arms are even worse brokers with these loans where told they could get paid more for selling borrowers this type of loan. so they put borrowers into these loans.


this loan type gives borrowers a option to pay a lower rate say 2% the real rate of 7% is what they really had and the additional 5% they whereent paying was being added to there loan when they only paid the low rate. it didnt take long to have the borrower owing more than the house was worth and now at the fully indexed rate they where unable to make the payments.





ITs a sad story but the good thing about this will be bad brokers will be out of the business soon and thier lenders as well.


the new companies springing up out of all this are not hit by the mistakes of the others.


they are bringing to the table new ways of doing loans based on whats best for borrowers. And eliminating greedy lenders and brokers.
Mortgage companies are going out of business because the investors are refusing to buy the paper.





What the general public does not understand is that most mortgage companies loan out money, collect the fees for doing the loan, then GET THEIR MONEY BACK to do it all over again.





We'll many investors that bought those loans ARE'NT BUYING THEM ANYMORE!





If the mortgage company cannot sell the loan, get their money back, sell another loan, etc, they are out of business overnight





Hope this helps





Terry





http://www.Welcome2Arizona.com
Its simple. People got in over their heads. Adjustable interest rates have changed and many people are paying dearly.





Sure, sometimes its the lenders fault. No Question. But cmon, people have to be smart enough to know how much they can borrow and be secure with. Its always both parties fault. The lenders and the Borrowers.