Recently I quoted a fellow Paragon agent who is unphased by the mortgage mess. He doesn’t believe there will be any serious affect on the real estate market in San Francisco. Relative to his 30 years of experience, he says, what we’re experiencing is really only a blip in the market.

What follows is another opinion– from Natasha Lovas at Triton Funding in San Francisco. She offers an additional insider’s perspective on what’s going on with buyers right now. It’s also full of good nitty-gritty information on what the new restrictions are for approving buyers:

Sorry to say, and this is only my PERSONAL opinion, but I really do disagree with your colleague’s take on the market. Or maybe I don’t really disagree, I am just seeing it from a different perspective. To the extent that the buyers out there now 1) were pre-approved with a stated income loan or 2) barely qualified for a full documentation loan, they will be rudely surprised to find out they no longer qualify in the same price range.Many lenders are now using higher qualification rates (not all, but the majority now) such as the fully amortized payment rather than the interest only payment. On many second mortgages (again, not all, but most), we need to qualify people at the prime rate PLUS 2%, not the interest only start rate.)

Many lenders will no longer do stated income unless the borrower is self-employed — they used to do stated income if you were salaried. Cash reserves have gone up on stated loans, from a mere $5,000 or 2 month PITI to 6 months PITI. And rates are higher on jumbo loans, which also affects qualification, especially if the borrower had high ratios to begin with.

Looking at the loans I closed in the first half of this year, how many of them could I still pull off today? About half would be my guess.

There are many more examples I could give you, but overall, lending has changed in a major way from what it was only 2 months ago. There is currently a lot of denial out there and I also believe that many mortgage brokers don’t even realize how much things have changed, but changed they have. It may take another month or two for these realities to filter down to buyers (and their realtors, many of whom are still oblivious), but I do see the pool of buyers shrinking. Enough to make a difference to prices in SF? I don’t know.

BTW, I am saying “I don’t know” a lot lately!

Thanks Natasha! BTW, I love all your feedback and will post anything that I think is relevant or of interest. So feel free to send it in.

This entry was posted on Wednesday, September 12th, 2007 at 12:00 pm and is filed under Mortgage Meltdown, Market Conditions. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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