Much of the excess housing inventory...except in our "oasis" around Sunnyvale and Cupertino...has been caused by borrowers who were tempted by the low payments on adjustable loans and interest-only loans offered a few years ago, and are now faced with unmanageable increases in their monthly payments.
Add to this major tightening in underwriting requirements by lenders caused by the subprime scandals, and you have the recipe for a softening real estate market.
Sue Baker-Dirickson, a senior loan officer with Princeton Capital, told us at the last office meeting that 100% loans are much more difficult to find and that most lenders are requiring 5 to 10 percent down payments.
Other changes for subprime borrowers: Stated income loans, in which income is not verified by the lender, are no longer available for salaried employees. Higher minimum FICO (credit) scores are often being required, and more importantly, buyers are now being qualified based on the fully indexed rate (the rate likely after the first adjustment) rather than the initial "teaser" rate.
Some loan brokers who've been around for a long time are saying that these are more like the rules from ten or more years ago...a healthy change.
Add to this major tightening in underwriting requirements by lenders caused by the subprime scandals, and you have the recipe for a softening real estate market.
Sue Baker-Dirickson, a senior loan officer with Princeton Capital, told us at the last office meeting that 100% loans are much more difficult to find and that most lenders are requiring 5 to 10 percent down payments.
Other changes for subprime borrowers: Stated income loans, in which income is not verified by the lender, are no longer available for salaried employees. Higher minimum FICO (credit) scores are often being required, and more importantly, buyers are now being qualified based on the fully indexed rate (the rate likely after the first adjustment) rather than the initial "teaser" rate.
Some loan brokers who've been around for a long time are saying that these are more like the rules from ten or more years ago...a healthy change.
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