CA, FL, and AZ Blackballed?
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.
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?