Yet another lender has gone down in flames. Decision One Mortgage has ceased origination operations due to ‘market conditions and declining production volumes’. They will fund approved loans that complete by October 1st. There will be no funding after October 1st.
Anyone with a loan in process at Decision One that will not make that deadline will now have to scramble to find another lender. This is bad for customers and brokers alike. There have even been instances with other lenders going under where the loans have closed and on refinances, which require a 3 day right of recission period, the funding disappeared DURING the recission period. That’s right - the loan closed but then the funds were not available for disbursement. Talk about a mess.
Conforming lenders seem to be in pretty good shape but standards continue to tighten, even for the best credit borrowers. Stay tuned.
4 Comments
September 26, 2007 at 2:10 pm
Mortgage brokers may be an endangered species. They look pretty bad when loans disappear right before a closing. It also doesn’t help when Bank of America CEO Ken Lewis says:
“I recently called broker-originated loans ‘toxic waste’ and I think that’s proven to be the case.”
…which he did in today’s Charlotte Observer.
I wonder whether statements like these are part of an effort to get borrowers to go directly to BofA retail branches. Or maybe Ken Lewis is grumpy that CFC’s stock has dropped all the way down to the strike price of his $2 Billion preferred stock boondoggle.
September 27, 2007 at 8:20 am
Agreed, when a lender goes under and the broker can’t deliver the loan, everybody scrambles and the broker is the one that looks bad - since they are dealing with the customer.
There are no doubt unscrupulous brokers out there - however, many brokers do provide a valuable service. I agree that BOA is trying to drive customers to their retail branches. What brokers provide, or they should, is finding the best loan to meet a customer’s needs. Typically if someone walks into a retail shop, there may be one available loan program. If it doesn’t fit, the customer has to start calling multiple shops. Good brokers will take that one call and shop 20-30 lenders for the best programs/rates, especially in the subprime market. Rates and programs vary widely from lender to lender.
It’s not such a big deal in the Fannie Mae box, but theoretically, a retail shop would charge a higher interest rate than a broker who can go to a wholesale lender. Banks do the same thing - I have heard from many customers who say ‘My bank offered me only a 5 year fixed and at 7.5%’ when the going market rate is 6.5% or less for 30 year fixed.
October 15, 2007 at 8:41 pm
Casey is back:
http://foreclosurehelpbook.com/
and in fine form.
January 24, 2008 at 11:32 pm
Can’t say I feel sorry for any of these banks. They all should have known this was going to happen.
The good brokers will always be around, just as good realtors will make it through the hard times.
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