07 Jul The bankruptcy now of Mortgage companies

The bankruptcy now of Mortgage companies

Mortgage companies and banks has always been slow to react to market conditions and trends. As an example, interest rates have doubled this year and yet lenders have yet to come out with attractive arms with 5, 7 and 10-year fixed rates. Most buyers only stay in their homes 5-7 years and these ARM products make a lot of sense for that timeline. In addition, they give the buyers the ability to buy more house since the interest rate is less than a fixed rate.

In the last twelve months refi’s have dried up and our sales are done because of the rate hicks and the slow to react banking section has not come out with programs to help consumers, have not downsized their labor force and middle and upper management to cut costs. As a result, we are now seeing bankruptcies and thinning of the herd in the mortgage industry. Here is a list of those so far just the last week…First Guaranty Mortgage, Plano Mortgage, FGMC, Customers Bank, and Best Capital Funding.

One of the scariest things about these online mortgage companies is that all of sudden you can’t close on your loan that is in process even if you are clear to close and closing the next day…when they declare bankruptcy like Guaranty Mortgage you are out of luck, no closing and maybe no home purchase. Just a word to the wise…use a mortgage broker who then finds stable mortgage companies for your loan so that does not happen to you!

What else will our real estate industry see in the coming months? I predict Title Companies will be drastically cutting back and some will not make it, loan officers and real estate agents will be leaving the industry (hard to know the real estate business and current market if you are a part-time agent in many cases anyway). Some real estate companies will close shop and some appraisers will retire from the business. Mortgage companies and banks will have massive layoffs, home building will continue to slow, unemployment rate will rise, and home sales will slow, and it will be a neutral real estate market and no longer a seller’s market.

This is not the end of the world, just a correction that happens occasionally, because it is a cycle. It is still great to own a home, enough the continual appreciation, tax breaks and wonderful quality of life that your home helps to provide.

I hope you found my blog on “The bankruptcy now of Mortgage companies” helpful. Look for more blogs on all aspects of Minnesota, real estate, and the world around us.

Just call, text, or email me with questions.

Jeff Anderson

The Anderson Team

www.mnrealestate.com

RE/MAX RESULTS

612-386-8600