The few lenders left that offer a first mortgage combined with a second mortgage or HELOC are pulling back the reins next week. HELOC’s were one of the first things to go when the mortgage industry started to sputter and most banks pulled out of that market niche very quickly.

There were a few good ones left, naming Wells Fargo as a leader. They continued to offer second mortgages combined with one of their own first mortgages.  The guidelines were status quo and Wells Fargo was happily shelving their loans as the only game in town.  I guess, they had enough loans or jittery investors or fear of continued market slump.  They are now tightening the loan to values they will allow.

As you know real property values continue to decline, especially in certain areas. The government and lenders across the nation have categorized declining markets based on sales data.

The following is a chart from Wells Fargo which shows the combined loan to value allowed in each category. As you can see, it is being decreased approximately 5% across the board. 

 

•   85 to 80 % in Market Type 1 – Stable
•   80 % in Market Type 2 – Soft Markets
•   75 % in Market Type 3 – Distressed
•   70 % in Market Type 4 – Severely Distressed

Many large lenders across the country have frozen lines of credits for existing customers. Again, this is based on national data provided by regional Realtor associations and local governments.  The data is evaluated periodically.  If you feel that your personal home value should be higher, feel free to call customer service at your lender. Ha! Try and reach someone that can help!

 

Happy Fourth of July

 

Dale Siegel