DSNews.com - Mortgage firms close
During the first half of 2010, the number of mortgage-related firms to close or fail jumped by more than a quarter from the same time last year, according to industry data released week. The increase was driven by financial institution failures as the number of non-bank lenders to close has dwindled. Based on information tracked by the online industry resource Mortgage.com, the period between January 1 and June 30 of this year saw 109 mortgage-related failures and closings. The figure represents a 27% increase from the 86 closings reported during the first half of 2009.
Bank and credit union failures have both doubled when compared to the first six months of last year, with the number of banks to go under tallying 86 over the last two quarters and credit union collapses at 11. Non-bank closings, on the other hand, fell by more than two-thirds during the same period to 12. An analysis by MortgageDaily.com of bank failures and regulatory orders suggests this year’s bank failures will end up between 175 and 200. FDIC Chairman Sheila Barr has indicated that bank closings will likely pick up pace and peak during the latter half of this year.
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Matt’s Commentary: As we talked about at the meeting on Tuesday night, the increase in mortgage firm closings will leave a gap in mortgage financing for those with slightly lower credit scores. Combined with the report that now 25%+ of all borrowers now have a sub-600 credit score, there will be a tremendous need in the future for some type of alternative financing for those who want to purchase a home. This is exactly where a seller financing system like Eddie Speed’s can come in handy, as investors will need to become savvy on how to find and/or create financing for those who are not being served by the current lending industry.
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Comments
Shirley, yes that’s true. It’s known as the SAFE act, and you can read more about it by googling the “SAFE mortgage licensing act.” However, there are still plenty of ways to make money in seller finance and note brokering without needing a mortgage license. It’s also not that difficult to get a mortgage license if you plan on doing a high volume owner finance business.
There is still some lobbying and fighting going on in Washington over the SAFE act, so I wouldn’t be surprised to see some changes to the law, but it’s certainly something to keep you eye on as an investor.
Thanks for posting. But I do have a question about something I heard about Owner Financing. Is it true that Investors, who do owner financing (more than just one of their houses) that they are going to have to be Licensed Mortgages Brokers? I hope it is not!