Wall Street is nervous, but there are still lenders funding mortgages. Wall Street is nervous. It’s plastered everywhere. Why should we as REALTORS® care? Because, it’s the investors on Wall Street who fund about half the mortgages in the US through the secondary mortgage market. Their capital replenishes the pool of cash that local lenders (banks, credit unions and others) use to help your buyers finance their home. That doesn’t mean the money is entirely gone, though. We’ve still got options.

The mortgage market is a multi-layered, convoluted chain of buying, selling, packaging and repackaging of mortgage loans through numerous institutions, funds and investors. Banks, mortgage brokers and other lenders issue primary loans to buyers looking to finance. These loans are then (in most cases) resold to the secondary mortgage market where they are bundled together with other mortgages (both prime and sub-prime) into mortgage–backed securities (MBS), which are then sold to investors who take on the investment risk of the loan.

When Wall Street starts getting nervous and investors begin pulling their money out of the credit market, this has a direct affect on the number of loans that primary lenders (local banks, credit unions, etc.) can issue because the pool of cash that lenders use to go out and fund more loans in not being replenished. With fewer lenders giving out loans and requiring stricter underwriting processes, the number of individuals who actually qualify for a mortgage goes way down. You can see where this is all going.

How long will the current nervousness last, and how deep an impact will it make on the overall economy? That’s unclear. There’s plenty of predictions from pundits, but it’s really a wait and see game right now. The Federal Reserve is now getting involved, having just cut their discount rate to banks (the rate it charges banks for temporary loans.) See the story here. This has calmed the market some, but what’s going to happen next is still unknown.
 

THE MONEY IS THERE

Even amidst all that is going on, make no mistake there is still capital available to fund mortgages and LENDERS ARE ISSUING LOANS. The loans may be harder to find and can be more costly if your buyer’s credit is not so great, but they’re there.

Here in the Bay Area, several lenders are sending out the message that yes, they are still financing, so come on in. Here are just a few:

• BANK OF AMERICA
  One of our mortgage affiliates, Bank of America, is continuing to fund loans throughout the US. Cindy Solis, VP, Bank of America Mortgage says, "Our company focus will continue to be the customer and making sure we help them realize their dream of Home Ownership.  At Bank of America we are able to continue offering our vast array of mortgage products because Bank of America is a diversified, national bank with multiple revenue streams.”

  Cindy Solis
  Vice President BoA Mortgage
  (800) 685-0001
  cynthia.l.solis@bankofamerica.com

• DIVERSIFIED CAPITAL
  Another of our mortgage partners, Diversified Capital, says, “We’re seeing this as a great opportunity. We’re not afraid of our warehouse lines being pulled and have a lot strong lenders that still have funds, and so we’re just concentrating on matching up the buyers with the right loan for their situation.”

  Rick Lewis
  rlewis@divcap.net

• THE HONTE GROUP
  The Honte Group tells us it’s “business as usual,” with a little less volume, but they’re definitely financing residential, commercial, development, fractional and even construction loans.

  Rob McCarthy and Eric Nelson
  (408) 377-4107
  mohara@thehontegroup.com

• TECHNOLOGY CREDIT UNION
  Tech CU doesn’t rely on out–of-state investors for closing their loans, and they’ve just sent out a letter to REALTORS™ stating that they’ll help you close escrows and are willing to back their statements with a 10 day guarantee. If they don’t close your purchase transaction in 10 days, they’ll send your buyer a $100 Visa Gift Card.  Contact one of their mortgage consultants.

  Gina Hack
  Mortgage Consultant Serving Phone & Online applications
  408-487-7559
  ghackl@techcu.com