Return of the SubPrime?
This is an interesting article that discusses the changes in the lending environment. There has been a lot of talk and anecdotal discussion, but what I found interesting was the citation showing an 82% drop in nonconforming loans.[googmonify]4494413162:right:250:250[/googmonify]
Nonconforming loans could be credit, proof of income or just a loan above the FHA limits of $417,000 - which includes a substantial portion of California properties. I am sure that this was a substantial contributor to California’s drop off the cliff in terms of the number of home sales - 48% off from the previous year. With MLS inventory exceeding 13 months, REO’s skyrocketing, and few buyers capable of buying even if they are interested, California is going to be in for a wild ride with short sales and foreclosures becoming rampant over the next few years.
The return of subprime and nonconforming mortages will take some time. Until then creative financing will be key.
The Future of Subprime Mortgages “Certainly, that return isn’t happening just yet. According to data from Clayton, nonconforming securitizations were down 82% between December 2006 and August 2007. Nonconforming loans are those that can’t be purchased by government-sponsored mortgage agencies Fannie Mae or Freddie Mac, which are limited to buying loans of $417,000 or less.”
