Fight For Your Home

Since the end of 2006 about 121 banks have closed or been bought. Recently American Home Mortgage (AMH) had about $4 billion in cash and had to pay $3.5 billion when their credit lines wanted their money back. It would be like Visa telling you to pay off your balance today. But that is the right of the issuers of the credit lines.

Countrywide is looking vulnerable for a bankruptcy. The standards of underwriting the loans has gotten tougher. Since late winter it has been tougher to get a loan. Before that, if you could fog up a mirror anyone could get a loan.

If you know that you will need to get a loan in the near future, you should do it now. In the short term it will get tougher. I heard of someone who had a 780 credit score, which is fantastic, offered a 100% loan for 8% on the first loan and 18% on the second. If you don't have money to put down it will be tough. Even people who get to the point of signing have had the bank change their mind.

This will be just another swing of the pendulum. Remember when your parents got upset and threaten to ground you for life? This is similar. Tough standards and scared lenders will tighten the market. We just have to ride the wave we have.