Penleymortgage BLOG

If you are used to being able to get 100% no money down financing on new home purchases and dont understand why its harder to do that today you need to read this.  

Since Dec 2006 there has been a rash of lender failures and bankruptcy filings which has caused the entire lending community to re-evaluate their guidelines and adjust their offerings.  

The old way of doing things was a socre of 580 qualified you for 100% 80/20 or one loan 100  with no MI... the last of the lenders offering that changed to mostly 620 or some even 640... which is going to make it much more difficult for borrowers with less than perfect credit 600 and below to obtain the financing they need...

this re-adjusting has also crept into the excellent credit set defined as 720 and up... it is no longer possible to get 100% financing through conventional means for 2nd homes or Investment properties....  and has pushed many well qualified borrowers into ALT-A borrowing to obtain their golas... which carries higher interest rates....

Overall lenders are becoming much more conservative in underwriting loans in 2007... 2006 was the worst year on record for early payment defaults(EPD) and shoddy underwriting...  Many wallstreet firms which collateralize much of this borrowing through warehouse lines has been demanding buybacks and instituting margin calls.  Many of these lenders cant afford the EPD buybacks or the margin calls and simply cease operations or file for bankruptcy protection.... 

Now more than ever it is important to know who you are doing business with to ensure that your loan will actually fund at the closing table... and that you work with knowledgeable brokers who can successfully navigate the troubled waters...

We estimate this climate will remain for much of 2007 and will eventaully stablize in the 2nd half of 2007...