Subprime Update

I have been staying in touch with mortgage people and title companies. They are saying that as of April 1, any deals that aren't closed in the subprime range will not close. Deals are also falling apart midway through the transaction.

Subprime loans are those to people with low credit scores, maybe very little credit history and 100% financing. My title person remarked today that she had 4 new deals come in but also 4 deals fall apart. Since last week I know specifically of 2 loan officers who had 2 deals fall apart mid-transaction.

I had hoped that the tightening and changing in standards would be slower giving people more time to jump in and cause a mini-surge but that doesn't seem to be true. The consensus is that the market is going to cool very quick and the inventory will rise.

FHA loans will come back but people will be surprised by the mortgage insurance premiums that they have to pay causing closing costs for Buyer and Seller. I would like to paint a rosier picture but this is what is going on. I doesn't look like the spring bump is as likely. It will be very likely that prices are going to become softer.

There are a ton of links I can add in here but if you want more
doom and gloom news, go to google news and search "subprime mortgage." There are 5798 links from just that in the news.