Struggling Mortgage Lenders
The mortgage industry is in more trouble now than it has been in years. The rate of defaults and foreclosures is higher than ever, and mortgage lenders are closing down or laying-off employees to cover the losses. But how did it come to this when only a few years ago the mortgage industry was booming with all time record sales? And how low will the industry go before things start to pick up?
The decline began only a little over a year ago when mortgage lenders began reporting a rapid increase in the rate of defaults and foreclosures. Along with this came the closing down of many smaller mortgage industry players, thus creating a higher demand for the secondary market. This secondary market is the true source for a majority of the industry’s economy, and many minor as well as major sub-prime mortgage lenders began to buckle under the pressure, closing down or declaring bankruptcy. As of the later part of August of this year, Accredited Home Lenders (AHL), out of San Diego, CA, stopped accepting new loan submissions. That means no more loan approvals, resulting in a loss of over 1500 jobs. But this isn’t the only major lender in trouble. HSBC Group announced the closing of a mortgage financial office, resulting in a loss of over 500 jobs, Impact Mortgage cut over 100 jobs, and Delta Financial intends to cut over 300 jobs in 2008. The list goes on and on, even some of the largest mortgage lenders such as Countrywide and Capital One Financial Corp. are borrowing billions to maintain operations, laying off hundreds, and even closing down certain markets. All told, over a hundred of some of the largest lenders have drastically cut their operations or closed their doors.
So how is this happening? Many people speculate that the two major causes of the industry’s decline is the low housing market (nationwide) and the sad but true story of how many people are getting into mortgages that they simply cannot afford. This is obviously gross negligence on the part of the lenders. By trying to make a sale, they are allowing people to take on a loan that is really beyond their means, forcing these people to eventually default or foreclose. This is not a winning scenario for anyone, but it also cannot be blamed entirely on lenders. The national economy also impacts the ability of the average person to make their house payment. When people are losing their jobs or taking cuts in pay, this obviously puts stress on their pocketbook.
It is extremely uncertain when the business will begin to turn around, judging by how these major players are adapting, and though this may be a bit frightening to the mortgage lender, it doesn’t mean that it is a bad time to buy a new home or get a mortgage. On the contrary, lenders are still looking to approve loans for responsible individuals. So if you have a good credit score and an adequate income, this might be a great time to buy, especially with the housing market at a national low.
About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.
The decline began only a little over a year ago when mortgage lenders began reporting a rapid increase in the rate of defaults and foreclosures. Along with this came the closing down of many smaller mortgage industry players, thus creating a higher demand for the secondary market. This secondary market is the true source for a majority of the industry’s economy, and many minor as well as major sub-prime mortgage lenders began to buckle under the pressure, closing down or declaring bankruptcy. As of the later part of August of this year, Accredited Home Lenders (AHL), out of San Diego, CA, stopped accepting new loan submissions. That means no more loan approvals, resulting in a loss of over 1500 jobs. But this isn’t the only major lender in trouble. HSBC Group announced the closing of a mortgage financial office, resulting in a loss of over 500 jobs, Impact Mortgage cut over 100 jobs, and Delta Financial intends to cut over 300 jobs in 2008. The list goes on and on, even some of the largest mortgage lenders such as Countrywide and Capital One Financial Corp. are borrowing billions to maintain operations, laying off hundreds, and even closing down certain markets. All told, over a hundred of some of the largest lenders have drastically cut their operations or closed their doors.
So how is this happening? Many people speculate that the two major causes of the industry’s decline is the low housing market (nationwide) and the sad but true story of how many people are getting into mortgages that they simply cannot afford. This is obviously gross negligence on the part of the lenders. By trying to make a sale, they are allowing people to take on a loan that is really beyond their means, forcing these people to eventually default or foreclose. This is not a winning scenario for anyone, but it also cannot be blamed entirely on lenders. The national economy also impacts the ability of the average person to make their house payment. When people are losing their jobs or taking cuts in pay, this obviously puts stress on their pocketbook.
It is extremely uncertain when the business will begin to turn around, judging by how these major players are adapting, and though this may be a bit frightening to the mortgage lender, it doesn’t mean that it is a bad time to buy a new home or get a mortgage. On the contrary, lenders are still looking to approve loans for responsible individuals. So if you have a good credit score and an adequate income, this might be a great time to buy, especially with the housing market at a national low.
About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.
Labels: maryland mortgage, maryland mortgage rates, mortgage broker
posted by Peter Dellane at
8:37 PM
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