Loan broker jonathan santiago said this:
For more on what the Federal Reserve is doing now, check out: http://www.bloomberg.com/apps/news?pid=20601087&sid=aVxY19yfBpAI&refer=home
For the recent news regarding Countrywide and Washington Mutual, check out: http://www.bloomberg.com/apps/news?pid=20601087&sid=aVuWc7w4pjhY&refer=home
It's not just stated loans that are getting higher rates. Jumbo loan rates are getting higher too (A Jumbo loan has a loan amount over $417,000). It doesn't matter if your clients have a score of 800 and have tons of reserves. Any non-conforming loan (basically a loan that Fannie Mae and Freddie Mac don't purchase) is viewed as too risky. No one wants to buy those kinds of mortgage-backed securities unless they have a higher rate or return which means a higher interest rate for your borrower. (The Saga of the US Mortgage Market has more details).
Will the Federal Reserve come to the rescue? While the market is certainly hoping so, there are still some experts out there who feel that they won't cut rates. Cutting rates may be seen as a panic move and would roil the markets even further. Instead, they may just keep adding cash to the system thereby increasing liquidity for these lenders and making sure they stay afloat. It's a real catch-22 for the Federal Reserve and a task that Ben Bernanke faces that no other Federal Reserve Chairman has ever faced before. Hold on folks...it's already a real bumpy ride!
Former New York Stock Exchange corporation are now trading at pennies on the dollar.
"HomeBanc Corp., an Atlanta-based mortgage lender, filed for bankruptcy protection today, two days after saying it would sell some of its assets to Countrywide. The company said Aug. 7 bankers had cut off credit and left it unable to fund loans."
I can't imagine prices in San Diego staying where they are if people can not get jumbo loans at reasonable rates. If the fed does not wish to figure this problem out we could be in real trouble. Although the equity in my house is getting crushed, I can't help but predict short sales and foreclosures are going to skyrocket in the high priced ares like San Diego and other parts of California.