Tuesday, August 7, 2007


August is always an interesting time here in Colorado. Booming afternoon thunderstorms, chillier evenings and the first hints of fall color are all increasingly on display as we start to say goodbye to the summer of 2007.

For many students (including my two daughters), school starts in less than two weeks. The pool closes on Labor Day. Those magnificent sunsets over the Rocky Mountains move a little further to the south each day, and arrive a few minutes earlier.

The Broncos are back in training camp (which means the front page of the Rocky Mountain News looks just like the sports page of the Rocky Mountain News), the Rockies are actually in a pennant race (okay, just close your eyes and TRY to believe) and the 2008 Democratic National Convention here in Denver is only 12 months away.


To answer the question... yes, the real estate market is changing. It's ALWAYS changing. The trick is to know how it's changing and then to apply what it means in a way that can help us make better decisions. If you weren't watching the headlines last week, more huge changes took place in the mortgage industry. American Home Mortgage, the country's 10th biggest lender, declared bankruptcy in a stunning turn of events that sent Wall Street hurtling lower at the end of last week. The company's stock, which was priced at more than $36 per share at the beginning of the year, closed at 70 cents on Friday after the company announced it could not fund its existing loans and would not solicit new ones.

More than 50 major lenders have declared bankruptcy this year, mostly those who focused on "Alt-A" or subprime loans. Years of rapidly appreciating prices in many markets caused brokers and underwriters to effectively throw caution (and underwriting guidelines) to the wind on the theory that, as long as prices kept going up, there was little risk in making more loans. That was a fatally flawed assumption.


The mortgage loan environment right now is highly dynamic and subject to more dramatic changes at any time.

Gone are many 100% LTV and stated -income products. The guidelines for Home Equity Lines of Credit (HELOCs) are being re-written almost daily. Second trust deed products are under careful scrutiny. Underwriters are once again dotting their I's and crossing their T's with a thoroughness that hasn't been seen in a long time.

Does this mean that you cannot get financing? Not at all. Change always brings opportunity, and right now, investors are lining up for good old fashioned "A paper" loans. Rates for conventional, full-doc mortgages have actually fallen 12 of the past 16 days. "Alt-A" and subprime loan products are tougher to find, but not impossible.

If you find yourself needing this type of loan, you cannot afford to deal with inexperienced brokers or "fly by night" lenders. Now is the time for professionalism and integrity.


Tighter credit means that, simply speaking, some folks who may have qualified for financing in January or February may not be so fortunate today. Just as our high foreclosure rate caused vacancy rates to fall and rents to increase, there exists that possibility that more renters may improve the outlook further for area landlords in the months ahead.

Whether you are a first-time buyer or a seasoned investor, now is a very good time to touch base with your mortgage lender to get a clear picture of where you stand in the "new world order". If you would like assistance in connecting with a reputable, honest mortgage professional, please let me know and I'll gladly pass along a quality

Change is in the air... make sure you stay up on the new lending landscape.