On August 31, 2007, ACC Capital Holdings announced that it was closing Ameriquest (Argent Mortgage was the wholesale division) by no longer taking loans and selling its loan servicing unit to Citigroup.
Does this mean on September 1st 2009 all of the 2/28 (2 year fixed) loans will have been weeded out of various loan servicing portfolios?
If it does, we will have to wait until September 1st 2010 for the 3/27 (3 year fixed) loans!
The middle of 2007 was when we saw just about every mortgage wholesaler shut down their operations. Some went out of business and some shut down their mortgage wholesale division. If you consider that the majority of the current foreclosures being sold right now are the end result of some of these loans then it would be simple to say that once we pass this period of fixed loans we should see some improvements to the real estate market.
What is the difference with this market compared to markets of the past? When this market turns the availability of financing will never likely reach the levels we have recently experienced. Let’s say that we start to see considerable improvements in the early part of 2010 that would mean that we still have another 1.5 years of a rather gloomy real estate market from today.
My feeling is that the market will slowly start to improve once we work through this cycle of mortgage loans. Even when this happens it will take time and there is no telling what other negative economic factors will come into play such as inflation, the war and the overall condition of the economy. There are so many factors that will play into this real estate recovery.
I hope that you aren’t expecting a quick recovery to this real estate market. The reality is that it’s going to continue for another couple years.
Eric Elegado Update