The current mortgage industry environment we all watch on the news nightly can be summed up with the most basic economic principle, Supply and Demand.

For quite some time, Wall Street had a hungry demand for high return mortgage backed securities. These securities, at that time, represented marginal risk for a great return to the investor. (In my previous blog on “rates are based on risk”, you can see that with a high return, you can expect high risk and vice versa). Now however, the tides have turned. Many of these loans that were bulk packaged into securities were adjustable rate loans. The adjustable rates have come to their adjustment or “rate increase” period and a record number of mortgage holders are defaulting on payments. Wall Street’s taste for this paper has changed in a huge way. With less interest on Wall Street for this paper, lenders have no one to sell their loans to. Unfortunately, this is causing some of the largest mortgage lenders in the world to face bankruptcy and its even rippling into the global economy.

Like it or not, the loan you were easily approved for last time may not even EXIST in the industry anymore. Now it is more important than ever to speak to a professional who can help you weed thru all the day to day changes. Plan ahead and expect a more conservative approach from your bank or broker.

I have been writing loans of all types for over 5 years and take pride in maintaining current industry knowledge and trends. I would love to be your lender of choice and I promise to stay on top of all the changes that could affect your family’s ability to purchase or refinance your home. Call me anytime with any question!