One of our lenders sent out an e-mail last Thursday that they were eliminating their 80/20 and 75/25 programs. Many borrowers had used these programs to obtain 100% financing while avoiding Private Mortgage Insurance (PMI). They would now only go to 95% financing.
Five days later they announced they would only go to 89.99% financing. Lenders are really pulling back from any loans with increased risk until the investor panic cools down. I imagine these programs will be back in some form in the future, but until then things can change daily.
Another agent in our office sent out this joke e-mail about lender guidelines. It’s an exaggeration, but it becomes less so day by day.
Very Important- Guideline Changes
· All borrowers must have one blue eye and one brown eye to qualify.
· LTV’s > 65% SISA Loans now require a minimum credit score of 849.
· For all LTV’s > 65%, 360 months of payment reserves now required.
· Borrower’s must have no previous bankruptcies in their family history going back three generations (including, but not limited to 2nd cousins twice removed).
· A minimum of 25 years self-employment history now required for all Stated Programs (at same location).
· Minimum Credit Score for Subprime Loans raised to 720.
· All non-arm’s length transaction borrowers (mortgage, real estate professionals,family members) will be required to provide full-documentation, subject to criminal background checks, wire tapping, strip-searches, blood tests, and a minimum of 12 hours of interrogation by the Department of Homeland Security.
Please note that these changes will go into effect within the next five minutes. So please lock your existing loans immediately. All existing loans in your pipeline must fund by noon today. The vast majority of fulfillment staff is off today, so no Rush Requests will be accepted.
We apologize for the inconvenience. We realize these are tough times in the mortgage industry for all of us. Be assured that we have a commitment to remaining strong and weathering out the storm. We ask for your understanding and cooperation.
