When WaMU decided that most of Washington State zip codes are soft, they let Loan Originators know via email giving us just hours to submit loans under the old guidelines (pre-soft haircut of 5% or what ever the value is). I have another example of how little time we are given as LO’s to deal with changing guidelines in our industry. Keep in mind when you read this, this is from one lender: these programs/products are still available with other lenders.
At 6:42 a.m. this morning, I received an email from MortgageIt, a subsidiary of Deutsche Bank, announcing the following:
Effective Friday, February 29, 2008 [last Friday]…
Discontinuation of the following products in their entirety:
FHMLC Home Possible
FNMA MyCommunity Mortgage
FNMA FLEX [All Fannie Mae Flex programs]
Loans APPROVED at this time of this notification that are negatively affected by the modifications (i.e. approved under the old guidelines) may still lock through the end of business Monday, March 3, 2008 for a maximum of 15 days at current rate/pricing.
Locked loans that re not approved at this time of this notification will have the price honored and may be underwritten to the old guidelines up to the original lock expiration date ONLY IF the loan package is submitted to the branch NO LATER than end of business Monday, March 3, 2008.
All loans must be closed and funded within the original lock expirations; RELOCKS AND EXTENSIONS WILL NOT BE GRANTED….
Again…this is just an example from one lender. What does this mean to me and other lenders? Obviously we won’t be using MortgageIt for these programs…we couldn’t if we wanted to. Other lenders are still offering (as of today) these programs. Much like WaMU declaring most of Washington soft…other lenders are not yet. Mortgage Professionals will opt for lenders who will provide the most options for our clients. Why work with a bank/lender who’s going to discount home values 5% when others are not?
This particular memo was backdated to Friday…or the email I received was distributed late. (I no longer have a MortgageIt Rep since they laid off their staff and shut down their local office in Bellevue). However, if I had transactions locked or approved with this company, you could see how I would have very little time to react for those transactions.
Just a sign of the current mortgage landscape.
If March begins roaring as a lion (as it seems so far), I do hope we go out as a lamb as far as our industry is concerned and that this is another “knee jerk” reaction and not a trend we see with other banks. Fannie Flex, MyCommunity and HomePossible have been great programs for many home owners.