From Reuters:
"Wells Fargo & Co, the second-largest U.S. provider of home loans, has identified more than 200 troubled housing markets nationwide, showing how the mortgage crisis has spread beyond a few select U.S. regions.Update: Here's the link to the entire PDF of the Wells Fargo product changes provided at BlownMortgage.com.
In a February 25 document sent to mortgage brokers, San Francisco-based Wells Fargo said it had identified "soft," "distressed" or "severely distressed" housing markets in 24 states and Washington, D.C. Most of the markets are counties, while a handful are cities.
Wells Fargo is tightening its lending standards in the affected markets on February 29, often by limiting the size of loans as a percentage of home values, regardless of borrowers' ability to pay. In some markets, it will not allow purchasers to borrow more than 75 percent of the value of their homes".
10 comments:
Harriet,
The articles on this topic are going to flood the papers in the morning.
15 Virginia counties.
13 in Maryland.
Plus all of metropolitan DC are "at risk."
http://www.reuters.com/article/
economicNews/
idUSN2724075020080227
Wells Fargo is probably too late to save their AAA rating. (Not the same as a AAA bond, for a bank, they're the last in the USA.)
Got Popcorn?
Neil
This makes me wonder...
We have increased our downpayment % twice now, but our interest rate has stayed almost the same. Could that be one of the reasons why?
Has anyone been able to find a list of the counties in VA/MD that are "soft", "distressed", and "severely distressed"?
According to Wells Fargo's latest guidelines published 2/11
Virginia distressed markets are: Alexandria City, Arlington, Clarke, Fairfax, Fairfax City, Falls Church City, Fauquier, Fredericksburg City, Loudoun, Manassas City, Manassas Park City, Prince William, Spotsylvania, Stafford, and Warren
Maryland soft markets are: Anne Arundel, Baltimore, Carroll, Harford, Howard, Queen Anne’s, and Baltimore City
Maryland distressed markets are: Calvert, Charles, Frederick, Montgomery, and Prince Georges
Thanks Erik:
Now for my 2nd question: what are the new guidelines that are being used for those 3 categories (soft, distressed, severely distressed)? I've heard 25% down (LTV <=75%) somewhere, but I think that is only for nonconforming in severely distressed areas.
I found it (page 2): 80% LTV for conforming in distressed markets.
http://www.tfsweb.com/doclib/files/ZENTFS/8502/wellsfargo%20newsflash%20december%2014%202007.pdf
Note that this pdf is dated December 17, but the guidelines seem to match the news reports.
the rules of this game are changing significantly, reverting back to pre-bubble standards.
w/ Alt-A defaults making rounds in the MSM, price declines will accelerate.
anecdotal sidenote: an acquaintance still managed to get a 300K 100% LTV on a 1/1 in Courthouse, against EVERYONE's advice except her Realtor, so the loose behavior's still out there.
"Now for my 2nd question: what are the new guidelines that are being used for those 3 categories (soft, distressed, severely distressed)? "
No need to look back at a pdf from December, just click on the link to the pdf that Harriet provided in the blog entry.
Non-conforming in distressed areas (all of Nova, PG, and DC) will be limited to 80% LTV (or 75% LTV if the property has been on the market for six months or more, if there is an oversupply (well, duh!), or if there are declining property values (well, duh! again). Bottom line, looks like you'll need 25% down to buy a house in any of these areas using Wells Fargo as your lender.
BTW, Montgomery is not on the distressed list, but is on the soft list.
Looks like debt doesn't equal money anymore. Hurray!
People who have saved for a down payment are now more likely to get into a house than people who haven't. 'Bout time.
Now we just need to get sellers to understand that the game has changed.
As of 2/11, Montgomery county was on Wells Fargo's distressed list, I just double checked.
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