Mortgage crunch hits Bay Area hard because of jumbo loans

[FourScore]

Read the whole thing. Not good!

Mortgage crunch hits Bay Area hard because of jumbo loans
Carolyn Said,Kelly Zito, Chronicle Staff Writers

Thursday, August 9, 2007

Need a mortgage this month? It's going to be harder - and more expensive - to get one. In the past week, turmoil in the mortgage markets has caused increasing problems for home buyers in the Bay Area and around the nation.

Kurt Herrenbruck, a mortgage planner with Fishman Financial Group in Berkeley, saw one client's financing evaporate in the space of three days last week.

"The client is well-heeled, with (a high credit score), and $500,000 in the bank, making an owner-occupied purchase with a 25 percent down payment," Herrenbruck said. "He needs a no-doc loan (meaning he cannot provide documents to prove his income) because of an employment hiccup."

Herrenbruck said Wednesday he found two lenders willing to make a no-document loan. But by Thursday it was down to one. And Friday, when his client's offer was accepted, there was none. "He can't buy even though he had the strongest profile of any no-doc: superlative credit, money in the bank and a whopping down payment."

The story underscores how skittish Wall Street investors are causing a ripple effect that hurts multitudes of people buying or selling houses...

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/09/BU3IREG2E.DTL

[Gregorian]

1. Yep. This is where the reality sets in. Who is going to buy?

Who is going to buy?

I got a call from my dad tonight. "Hey, how are you?" And I immediately knew what he meant. I left a brilliant property 8 months ago. A place I'd have never left if it hadn't been for Republicans. I was disgusted, and living on a gorgeous piece of property. But I got a hell of a price for the place. I knew he meant how lucky my timing was. I knew he meant I would never have gotten that price. And when I mentioned it, he said price wasn't even the issue. I probably wouldn't get a buyer now.

There are many bubbles to this foam called real estate. In the section of the market that I've been in buyers usually don't get loans. They just write checks. That isn't the case in the Bay Area. Those are expensive properties, but buyers almost always get loans. A one point rise in interest rates? That's a killer. On a million dollar pad? They put down, what, a half million? I doubt it. But just imagine they do. That one point could be a $400 per month payment difference.

Two points? Suddenly we've got a slowdown in buying. Rates up. Prices down.

There is one comforting thing in all of this. We all go down together. I get less for my house. But your house costs less for me to buy. That does overlook the fact that people have to pay off loans. Oops.

[cliss]

2. You are absolutely right, Gregorian.

Who is going to buy? Who CAN buy anything?

We're in Portland, and we've seen the crisis slowly growing. It's been like watching a train wreck in slow motion. I can only imagine what it must be like in a super-heated market like S.F.

You can see them: it's the empty houses. The family suddenly disappeared. the house stands empty. The grass grows in the front yard, until it becomes 3 feet tall. Then, suddenly there is a For Sale sign by the Bank. There are a lot of those lately.
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And it comes back to the question: Who is going to buy the house?
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My friend bought a "fixer upper" house for $500,000. He's been trying to sell it for 1 solid year with no takers. He's asking $590,000. All this time, he's had to make a mortgage payment of $3,000 / mo. Can you imagine?

[OrangeCountyDemocrat]

4. Have You Sat Your Friend Down & Told Them They're A MORON?!!

I'm guessing he's going to keep the price at $590 until it's too late.

I can't imagine the stupidity of people. I bet he comes up with every possible reason why his house has been on the market for over a year, except the real reason.

[cliss]

5. Will he keep the price at $590?

Answer = Yes. He feels that his final price, he's not going down any time soon. Because at this point, he has been paying for about 1 year and he has to cover his losses. Plus, I think the property tax was around $12,000 / year so he's been making a lot of additional payments like sewer, water, on and on the list goes.

You're right, though.

[Sapere aude]

6. I've had my house on the market for over 6 mos. I just reduced the price and the

real estate agent reduced the commission. If it sells I will get just a few thousand less. I don't think there will be anyone who qualifies around to buy.

Any houses that have offers on them are mostly contingent offers. The buyer can't buy until his house is sold and he may have a contingent offer from someone waiting until their house sells.

I am in no real hurry to sell as long as I have my job. If that goes I'm screwed.

[The_Casual_Observer]

3. Oh, Tough Ass!