Posts filed under “Derivatives”
The following comes from a major U.S. mortgage writer. It is typical of what has been going on in the mortgage business over the past few days:
As you are probably aware, the mortgage industry is going through a major disruption. In response to these market conditions and to enable ******* to continue to serve our customers; we have made changes to our loan eligibility, appraisal rates and repricing of loans in the pipeline.
- Rate exceptions by AE’s will no longer be allowed
- Only full doc loans allowed
- No Non OO (Owner Occupied) and second homes
- Increased disposable income requirements on D/R’s > 50% from $2000 to $3000
- No refinances of Vacant Properties
- No refinances of properties listed for sale in the last 3 months
- Limited ltv’s on homes listed for sale > than 3 mos but less than 6mos for cash out refi’s
- Loans in the pipeline will be repriced according to the current rate sheet unless they are in ‘"docs out" status or are Purchase transaction types in "Conditional Approval"
- All loans in the pipeline that are NOT O/O Full Doc must fund by August 17
- Appraisals must be less than 90 days old
- Appraisals must contain 1 comp sale< 3mos old and 1 current listing. All other comps provided must be < 6mos old
Thank you for your understanding; we realize the impact this will have on you and your customers however in order to continue to stay in business we felt it necessary to make these unfortunate
Now if only this had been sent out, oh, say about 3 years ago . . .
There were a couple of great graphics in the New York Times recently, explaining in some degree of detail, the machinations of the RMBS, CDO and CLO markets.
These are the packaged (and repackaged) holdings that are based upon the sub-prime mortgages that have been defaulting in such large numbers, and have been leading to hedge fund blow ups.
First up: todays front page article by Gretchen Morgenson: Mortgage Maze May Increase Foreclosures.
Graphic courtesy of NYTimes
Next up, the accompanying graphics to Floyd Norris’ The Loan Comes Due: