bostonbubble.com

[balor123]

I opened an account at a new bank this weekend and asked about mortgage applications. The agent told me that no one is taking out new mortgages and no one is qualifying for the "ridiculous" conditions on refinancing. She said everyone is just looking for a good place to park savings. This could mean a few things. First, people aren't taking mortgages from traditional banks anymore. Second, people aren't buying houses in Boston much right now. Third, people are paying cash. I'm thinking a combination of 1+2. I'm not seeing many new postings on Redfin so I think there's just low volume of buyers and sellers.

[CC]

That's true! I almost bought a bank own property which is in pretty good shape at around 4XXk. The bank requires a mortgage appravel letter from them and I got it. Strange even my credit score is around 800 and my down payment is about 33%, they didn't want to give me the mortgage deal. Though I could get mortgage from my original mortgage agent, because the bank asks too much (I may not get my 5% back if I change my decision) and I hate the way they handle it, so I decided to let it go.

BTW, this is one of the largest banks in the US. I really don't know why wouldn't they give mortgage to a guy with 800 credit score and 33% down payment. My educated guess is 1) they are still in trouble 2) federal bonds pays 4% interests. They don't want to take any risk for little 1% interest difference.

[admin]

[balor123]

Unlikely it'd be worth it to them. They don't have to employ anyone to earn 4%. It would only work for a small range anyway. I'm sure they know that making an offer at 10% is a waste of time and anyone who'd actually accept such an offer they don't want to make it to.

[CC]

The link of this site may explain it:

Federal government responsible for up to 95% of mortgages in 2009 Q4
http://www.huffingtonpost.com/2010/02/19/paul-volcker-says-mortgag_n_469415.html

[CL]

CC -my experience is if the bank is confident they can sell the loans to Fannie and Freddie, they have no economic reason not to lend to you, sell the loan to government and earn the spread in between. So the main reason why there are so much trouble getting loans is because government is shoring up the lending standard and they have doubt selling the loan to gov.

The lending standard is a lot stricter especially in buying condos, and go beyond standard credit score and loan to value ratio. Condo association reserves, homeownership ratio, etc etc, all comes to play. To be fair, I don't blame the government for doing that since they are taking a lot of risks for guaranteeing those loans.

[CC]

Actually I think the bank will give me the mortgage sooner or later, but I was shocked that their attitude showed they were not really willing to do it. Keep in mind, I was buying their foreclosed property. My offer is only about 5-6% lower than their asking price which is pretty close to market price.

BTW, I do blame the government for buying mortgage securities. They are just wasting our tax money to keep price inflated. US is following Japan's root (debt!). This will be really bad!

[balor123]

Not just wasting taxpayer money but also raising the cost of living.