Home Sale Relief

blownmortgage.com is a great blog. A short post  caught my attention today:

Wells Fargo Home Equity is planning on moving the Orange County and Los Angeles, California home markets from “soft” to “distressed” in its underwriting guidelines for home equity loans.  This move restricts underwriting guidelines by an additional 5% in terms of loan to value guidelines for home equity loans.  While the change hasn’t been made yet; it has been deemed imminent by internal folks close to the situation.  This would cap all second mortgage liens at 85% combined loan to value in those counties.  Stable and soft market LTV maximums are at 90%.

This comes on the heels of the recent Goldman Sachs report that stated that California home values could be overpriced by as much as 35-45%.  We’ll have more on that report later.

Things are tightening, folks. If you can do anything about it, I’d suggest you do so. Don’t wait as it is getting worse, unfortunately.

I did talk to someone today who lives in Southern California. No panic yet. Things in West Hollywood are supposedly still “on fire” (in a good way.)

I doubt it will last that long. But there are pockets like Seattle that haven’t had things turn bad (yet?). I fail to see how this is any surprise. Real estate ultimately responds to the cost of funds. If money is cheap and easy, real estate prices go up. But although this is true on a global level, on a local level the pace of things can vary quite a bit from one area to another.

But that doesn’t mean you shouldn’t worry. Houses that require large mortgages for a buyer to come forward will depend upon the availability of mortgage money that is getting harder and harder to come by. Government guaranteed mortgages are still readily available but the larger mortgages of the Southern California variety just got harder to get.