As everyone is aware the housing market bottom is being extended because of the sub prime meltdown and now the Alt-A atrocities.  Alt-A, for those who don’t know, are typically low documentation type mortgage programs available to good credit clients.  They include state income, no ratio (where you don’t even list your income on the application), no income and no asset types and of course the no documentation program where income, assets and employments information is not provided.

In the past 2 days we have experienced extreme pricing increases for Alt-A programs.  Or worse; as many lenders have either ceased operations altogether.  As most of these low documentation loans have not been able to be sold on the secondary markets; creating one of the worse liquidity issues we have seen. 

CNN’s Gerri Willis explains why the market reacted so strongly to one mortgage lender’s problems.

  I believe when the Federal Government jumped in a few years back expecting lenders to provide affordable housing for everyone; the problems began.  Lenders relaxed underwriting guidelines and the result was first time home owners got theirs homes, but no one was policing true affordability to protect the home buyer.  If you didn’t have to document income at all; then how much of a home could you “afford”.  The answer was, unfortunately, whatever the maximum loan amount allowed by the lender.  Crazy.

The good news?  This too shall end.  It’s time to get back to the basics.  Conventional FNMA, FHLMC or FHA and VA programs are and have always been available.  If you have any questions regarding the mortgage program you currently have please contact me at BeechTree Mortgage, Inc. or email anytime.  We are here to help educate consumers on mortgage program choices and have for over 11 1/2 years.

Stephen Thaggard

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