Following the well-publicized subprime crisis earlier in the year, a major disruption in the credit markets broke out on an unprecedented and historic scale this week on Wall Street. This caused major write-downs of loan and security portfolios and brought down one of the top 10 Prime and Alt-A lenders in the country, American Home Mortgage, which stopped funding $800 million in loans beginning Monday and left thousands of home buyers stranded at the closing table with their home purchases. American Home Mortgage was the in house lender for Keller Williams Realty in Delaware and this whole situation has left many Keller Williams clients without loans. This illustrates the value of using a broker who would have been able to flip a loan that was with American Home Mortgage to another lender that is taking American Home Mortgage loans that didn’t fund or close but were approved.

Due to worse than expected delinquencies of all types of securitized mortgage products last month, rating agencies announced that they will be increasing the default frequency in their models for loans with higher loan-to-value ratios, particularly in the Alt-A* sector. As a result, investor appetite for collateralized debt obligations comprised of mortgage-backed securities all but dried up except for prime AAA-credit conforming mortgages. In response, lenders have temporarily suspended a number of loan programs and significantly increased the rates of others.

If you find yourself in need of some insight or direction in this changing market place I would like to invite you to sit down with me to discuss financing options for you or your client’s loans in light of the recent mortgage changes and what you can expect with financing in the future.  Please Feel free to contact me at 302-368-7132 Ext.12 and ask for John Thomas.  We are holding a lunch and learn seminar on August 22nd to address all of these issues.  If you would like to attend, please call me to register.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713