Last one out of the mortgage business, please turn off the lights!

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

32 thoughts on “Last one out of the mortgage business, please turn off the lights!”

  1. What you are saying seems to be the consensus of many experts. I am just a bit sad that my in-laws didn’t listen to me and bought a place for my sister in law in San Diego last year anyway. Now that place’s comparables are 25% to 50% below the price they paid and my sister in law lost her job. It’s a pretty sad situation.

  2. Brazil Property

    Nice summary of what’s going and what will happen to the real estate market. The fact is that the price comes down not the sale. the main cause of sale is foreclosure.

  3. Hi!

    Congratulations for the content of your site! I find many things I was looking for.
    I’ll indicate it for some economists I know.

    See ya

    Jul

  4. lease purchase with option to buy

    i agree that the market will improve once we get through the cycle, however, that cycle is far from over. we are only seeing the beginning of the effects of the fallout. the sub par lending practices went on for far longer than a few weeks to months, and we will see the fallout for quite some time to come.

  5. True, it is the beginning but I believe a lot can change after the presidential elections this years. If you think about it, there is never really a good time to buy or sell property. What I am trying to say is that sometimes, it’s good to sell the property when the property values are high and when they are low, buying becomes easy.

  6. Utah Real Estate

    I’m waiting for the spring of ’09 for the real estate market here to make a shift. This winter is going to be prime buying and lending season in my opinion.

  7. Save Money On Homeowners Insurance

    I am in Northern California and the value of my Home dropped 40% in the last couple of years. The prices will eventually rebound though. In many places is now cheaper to buy a house than it is to rent so many of the long time renters may start buying houses now. With prices where they are there’s no better time to buy. And of course once people start buying prices will start to go back up.

  8. London Estate Agents

    You raise some valid points. Maybe we will need a change of Government on both sides of the Atlantic before things get moving again?

  9. Louisville Real Estate

    The mortgage, and real estate industry will continue to be a roller coaster for most parts of the country for at least a couple years. Its almost like the rules are changing daily right now. Just have to try to keep up to date as best you can, hang on, and wait for things to smooth out.

  10. Well for sure we are not in the land of easy money anymore. Here in Philly the housing market is faring much better than many other places BUT we are finding it much harder to get our clients approved for mortgages. Even those with good credit and money down; every week it seems that the mortgage companies are changing the rules. They have gone from one extreme to another. This too shall pass…

  11. Tammy at Myrtle Beach Real Estate

    Here in Myrtle Beach we’re also having trouble getting clients with good credit mortgages. It can be very annoying. Hopefully, this mess will get straightened out sometime in the near future. Right now we find ourselves dealing mostly with short sales and foreclosures. Things will turn soon…got to stay positive.

  12. Tammy, I hope so but I’m not convinced. I think we will not see the tail-end until at least 2010. I work in real estate so feel the pressure as much as most here. Gah, staying positive is the key you’re right.

  13. My parents sold their La Palma home back in June of 2007 for over $650,000. I just looked at the Zillow estimate and it’s now under $450,000. While I’m happy my parents made so much, I think it will be a long, long time before the new owners are right-side-up on that home.

  14. Do you see it recovering quicker if there’s a Republican in office or a Democrat or it won’t matter?

  15. We are seeing alot of the same issues here in Phoenix. Not only are we having a difficult time finding people that qualify but keeping people in the town homes sold already is difficult.

  16. I think the election results could be a huge factor to getting this economy back on track! I am not going to express my political opinion in this forum but I think it’s important to make sure we make the correct decision and get back to a better healthier economy!

  17. Las Vegas Short Sales

    We come across this topic on just about every comparative market analysis we do nowadays. The big question that potential Las Vegas home sellers has is if (or when) prices are going to recover. Unfortunately, our opinion is that this is going to take much longer then just weeding out the bad loans since prices went up due to these loans in the first place.

  18. I think it all depends on the area – some places are still doing well while others not so well. It does seem that a lot of mortgage companies and banks are going out of business though!

  19. I am in Florida and the value of houses has dropped 39% in the last couple of years. Hopefully, the prices will eventually rebound though. In many places is now cheaper to buy a house than it is to rent so many of the long time renters may start buying houses now. But the reverse is the case in the UK,were it’s actually cheaper to rent than to buy a home. With the Credit crunch hitting big investments and financial firms, you expect to see distress in the property market. And of course once people start buying prices will start to go back up as well.

    Thanks

    Monica

  20. Tara Lyons - Belleville Real Estate

    All I can say is I’m glad we’re not in the same shape up here in Canada. We saw a slow down, but th market is still pretty strong. It’s not quite a buyers market, more balanced than anything.

    I hope things start improving for you guys down there.

  21. What a mess this whole mortgage industry has now turned out to be, I hope that over the next few years somethings can change for the better.

    steve’s last blog post..You MUST Read This Article To Find Out Whether Your Credit Card Debt Relief Company Is A Scam Or Not!

  22. A colleague of mine lives and work in the SD area, I have been considering getting a place there looks beautiful, gonna bookmark this site for future reference.

  23. Gabrielle @ Real Estate Agent in Orlando

    We appreciate the work you have put into your blog. We will bookmark this for the future. We love your site and we look forward to coming back.

  24. Well i agree that the real estate market will recover though we can’t say in how much time. Morever, the prices of real estate go down but never do the sales. Nice information on real estate market. Thank you so much.

  25. Gabrielle @ Short Sale Help

    Wow! Totally awesome, Thank you so much for sharing!
    .-= Gabrielle @ Short Sale Help´s last blog ..What is a Short Sale =-.

  26. Hi,

    I personally feel that a depressed property market could be a good time to pick up under valued bargains so that when the property market brightens it can be sold for a profit. Just my 2 cents worth. Thanks.

    Regards,
    Justin

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