The following is a email we received from Don Dishion, senior loan consultant, and long time mortgage advisor which we wanted to post as it provides insight into the current home mortgage market here in the Santa Barbara real estate market place. To search current Santa Barbara properties available, use this customizable search to fit you needs.
To my friends and business partners, I am sure you have heard that the merger between Bank of America and Countrywide has been finalized. This is great news for our industry as two powerhouses in real estate loans with a combined nationwide market share of 18% have gotten together with the goal of obtaining a 25% market share! The only way that will be accomplished is to provide highly competitive programs and underwriting in the future and let the loan consultants do their job. What we do have now is the Countrywide management team in place keeping the same loan origination system that has made us number one in the South Coast Santa Barbara real estate market.
As you know underwriting guidelines have changed considerably. The most recent news in this regard is that Ben Bernanke did not outlaw the origination of stated income loans as we feared from the rumors we had heard in Washington and in the press. He did forbid the use of stated income loans for sub prime borrowers which was good, but fortunately did not mentioned anything along those lines regarding prime mortgage borrowers. This is fantastic as we all know that in the Santa Barbara real estate market, we would have a very tough time fully documenting all borrowers in this high priced community of entrepreneurs. Now we just need to get the secondary mortgage market to start purchasing these loans again now that home prices are stabilizing. Therefore the few lenders that are originating stated income loans have got to hedge their bets and price them high enough to insure that they will not be under water when the market loosens up. For loans to $417,000 the pricing for reduced documentation is still excellent. With home prices softened, buyers for these loans are getting easier to find. More good news is that jumbo and super jumbo loans are definitely available with Countrywide and most of the major lenders. Well qualified borrowers with a good down payment have these loans available. Also with in house processing the ability to close transactions in two weeks from start to finish if needed is available. This may help if a buyer’s first choice for a loan has not worked out.
In the early eighties, buyers were finding other ways to finance purchases besides going directly to the lenders as rates were as high as 16%. Things are definitely better than that era but due to tight money I think other options should be considered in addition to borrowing directly from conventional lenders. An obvious idea that has probably been ignored over the last few years is to explore the availability of seller financing. Other ways that deals were put together were through contract sales, wrap around mortgages (most of these if presented to the lenders would not be approved however), and making higher offers with sellers paying as much as 3 points to buy down the borrower’s rate making the payment more affordable. I am sure all of you know about these methods so for the short term it might be good to explore them again and find other creative ways to save your transactions if conventional financing is not available. The good news is there are great buys out there and where there is a creative will there is a way.
Don Dishion, Senior Loan Consultant, Countrywide Bank, FSB
Thank you Don