Tuesday, August 7, 2007

"What in the Heck is Going on With Lending"

I haven't spent any time at all discussing the "lending crisis". I watch it unfold, as many of you do on CNN and in newsletters and emails I get. I watch it unfold as people call me who want to live in Vintage Vegas. We've generated enormous interest in the central urban core of Las Vegas (that we humorously refer to as VeryVintageVegas). The word is getting out there to the suburbanites, and to the newcomers that there's something different available than the soulless, look alike conformity of the suburbs.

I have long lists of people who are ready, even anxious, to buy in Vintage Vegas. But are they willing and able? That's where this lending crisis comes into play for us.

The "foreclosure crisis" of the suburbs isn't hitting us in Vintage Vegas in the same way as it hit the suburbs. The foreclosures we see in the urban core are FAMILIES that bought homes with loans that have adjusted. Yes, there a lot of them here as there are in the suburbs. In the suburbs, the foreclosure crisis is with families, but also thousands and thousands of "speculators" who thought they were investors. We've all heard the stories of people who bought 3, 4, and in one case 23 homes in 2004, with the greedy anticipation of 20% a year appreciation returns. That's where the crisis really sits. But the bleed over is a STEAMROLLER that's affecting the urban core as well.

The result is lots of buyers who want to buy, but now don't have the loan programs or rates that let them do it.

One of the best and most concise articles I've read is from Aaron Gordon, a lender here in Las Vegas. He sends me his writings by email, but I've never done business with him, and though I'm sure he's very good at loans as well as at writing, he's not one of small handful of lenders I recommend to my clients.

There's important knowledge in it, for both BUYERS and SELLERS, who are trying to figure out what's really going on in the real estate market.

It's written by a mortgage lender to real estate agents, but there's a lot of great explanation of the "crisis" that anyone will find valuable. His article is quite long, so I put it way in the back of VeryVintageVegas, and am linking to the rest of it.

I quote:
"What in the Heck is Going on With Lending and How Do We Adjust Our Business?"
Last week, a real estate broker I have tremendous respect for, sent me an email that said, "What in the heck is going on with the lending business and how do we adjust our business?" He asked me to come speak with the agents in his office about it this week. Here is what I will tell them....
What's happening in lending is that the biggest banks in the world, like American Home Mortgage (AHM), one of the nation's top 15 lenders, are suffering tremendous losses caused by foreclosures and a soft real estate market. They are all concerned for survival and they are adjusting their business model. AHM couldn't move quickly enough and stopped funding loans in early August.
To understand where we are you need to understand how we got here.

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