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alstry (35.87)

CA, FL, and AZ Blackballed?

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March 20, 2008 – Comments (2)

Leery Lenders Demand More From Borrowers
Thursday March 20, 5:33 pm ET
By Alan Zibel and J.W. Elphinstone, AP Business Writers

Banks Remain Wary of Home Loans; Lending Standards As Strict As They Were 20 Years Ago WASHINGTON (AP) --

Just when consumers and the U.S. economy need banks to lend more freely, the mortgage industry is making it harder to borrow -- even for those with good credit.

Mortgage insurers, whose backing is required for borrowers who can't afford the traditional 20 percent down payment on a home, have already flagged nearly a quarter of the nation's ZIP codes where they refuse to insure some home loans.

That encompasses a wide variety of neighborhoods: McMansions in Scottsdale, Ariz.; luxury Miami condos; 1960 ranch houses in Flint, Mich.; and early 20th century kit homes in Metuchen, N.J.

The entire states of California, Florida, Arizona, Michigan, Ohio and Nevada -- which have seen the highest foreclosure rates and the worst price declines -- are blackballed on some mortgage insurers' lists.

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It appears the financial system is FINALLY clamping down on lenders, builders and borrowers.  There is just too much inventory and too much debt and not enough income to cover the obligations.  Defaults have destroyed our financial system causing Trillions in damages so far.  Capitulation seems to be near at hand.  Especially if you build in CA, FL, and AZ where most builders build. 

NOW THE PAIN WILL REALLY WILL BE FELT....BUT NO PAIN NO GAIN.

Leveraged builders must restructure debt or else the systematic problems will only get worse.  It seems like that message is now gaining traction.  Not only that, by only allowing qualified buyers to be able to buy homes, it will only speed up the liklihood of necessary restructuring of homebuilders around America.

The restructuring process will not be much fun.....but necessary.  The longer we wait, the worse it will be.

Is it possible to have a negative CAPs score?

2 Comments – Post Your Own

#1) On March 21, 2008 at 12:01 PM, mandrake66 (77.24) wrote:

According to a WSJ article yesterday, small regional construction companies are going under now. They're having the same problems as the national homebuilders, but don't have the capital to sit it out. 

Is it possible to have a negative CAPs score?

I hope not. Fannie Mae is killing me suddenly. I should have known better than to place any kind of bet on that thing, positive or negative. Never bet on any company that doesn't feel any need to play by the rules. Like actually having assets that are worth something.

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#2) On March 21, 2008 at 7:28 PM, AzRealtorDarren (< 20) wrote:

If the government hadn't relaxed the FNMA requirements, none of these crazy loans would have happened. 100% financing equals no personal investment in your own home. This makes it EZ to walk when the going gets tough. There used to be a cap of 2% per year on interest rate increases on adjustable rate loans. You used to be able to borrow 85% of appraised value on a home equity loan, no more. The government created this problem, but the catch word is "preditory lender". These lenders all sold their paper to the secondary market and would not have been able to do loans they could not sell.  

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