Borrowing in 2008 is like living in 1984
I promised to report on my current clients' adventures in the financial chaos. The persistent rumors that no one is getting mortgage loans are just that, rumors. The lenders I work with are still writing loans and buyers are still buying. My buyers are facing competition for houses, so I am not the only broker with buyers who can borrow for a home.
These are the financing issues I am seeing:
1. Weird rate trends.
2. Appraisal scrutiny.
1. Thursday, the daily rate sheet that I get from a lender had “N/A” marked on the adjustable-rate chart. What does that mean?
Adjustable-rate mortgages have occasionally been nearly equal to fixed-rate products in the past. That made them useless. But this week, they are higher than fixed-rates, which make them worse than useless. Therefore, good lenders did not advertise them. The new Fannie and Freddie rules have driven up adjustable-rate loans. There are a few portfolio lenders who have adjustable-rate products that are lower, but there are only a few.
Another thing I heard was that 15-year rates climbed above the 30-year rates. This is not normal; there’s usually an interest rate incentive for paying back more quickly.
... One lender-colleague started quoting Aldous Huxley's book [Correction: Actually, George Orwell's book], 1984 “More is less; Up is down; Black is white.”
2. Underwriters and appraisals:
One underwriter asked for an additional comparable home before she approved the loan.
Another lender first allowed a “drive-by” appraisal, and then changed its mind. That appraisal is still pending.
Anyone else borrowing out there? What are you seeing?
Can my readers who are appraisers tell me if they are getting more scrutiny of their work, or is it coincidence that I had appraisal issues in two transactions in one week?
Added note: Correction: Huxley didn't write 1984, George Orwell did.
One more: I am told my examples of double-speak are also mis-attributed.
