Chase pulls out of Wholesale Lending with Mortgage Brokers

I just received this memo from Chase:

“Home lending remains an integral part of our firm’s overall financial strategy, and as such, we have a responsibility to our customers, shareholders and employees. Over the last two years, we have diligently reviewed and adjusted our home lending strategy and practices to address the unprecedented challenges of today’s market. Today, we are announcing a strategic shift that we believe will serve our business and our customers well for the long term.

Moving forward, we have decided to focus on loan originations through the Chase bank branches, our Consumer Direct business, and retail-originated loans acquired from Correspondent lenders. Our new strategic direction is supported through the recent merger with Washington Mutual, which increased our bank branch inventory nationwide and enables us to serve nearly 70 percent of the American population.

As a result of our strategic decision, we will no longer accept any new locks and registrations from or purchase any loans originated by brokers effective Friday, January 16, 2009. As a result of these decisions, we are closing our Wholesale business….”

As of this moment, Chase will continue their correspondent relationships (our company is correspondent with Chase) but mortgage brokers just received another punch to the gut.   You can also see how little notice loan originators receive in this type of climate.  

The question is, how many other banks will follow Chase’s shift away from mortgage broker relationships. 

We're not in a declining market…we're just soft

I just received this memo from Washington Mutual:

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Please be aware that most of King, Snohomish, and Pierce counties are now considered to be in a “soft market.” This means that your LTV max will be reduced by 5% from the normal established maximum if your loan is in a soft market on a conforming loan (ie, our Flex 100 will now be countered to 95% LTV if your loan is in a soft market).

WaMu has provided a calculator to determine if your zip code is “soft”…yes, Billiruben, even my West Seattle zip is soft…so is Bellevue and every other zip code I’ve popped in their system.

About a week or so ago, Chase issued a memo (for second mortgages/home equity loans) that Pierce, Thurston and Clark Counties have a -5% factor and Asotin has a factor of -10%.

PMI Mortgage Insurance Company will no longer insure loans over 97% loan-to-value and are limiting the loan to value to 90% in “distressed markets”.

The photo is of my 12 year old cat, Louise. She’s soft.