1. Mortgage Market Meltdown What it Means to You
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[Your Company Name]

2. Perfect Storm
Mortgage Market Meltdown

3. Key Determining Factors
Subprime and Alt-A Lending
Alt-A consists of reduced and No-Doc
Accounted for 40%-70% of loans in
Investor appetite brings loose underwriting
Everybody gets a loan
Liquidity crisis hits subprime December ’06
Maybe everybody can’t pay it back…
Mortgage Market Meltdown

4. The Role of Mortgage-Backed Securities
Most loans are sold as securities
Investors accept risk with reward
Delinquencies mount; risk outweighs reward
Keep your loans – we don’t want them!
If I take them – I’ll pay you less!
American Home & others can’t cover losses
Mortgage Market Meltdown

5. Results
Underwriting guidelines based on historical data, including rising prices
Consumer maxed-out and unable to repay
No more equity to support spending habits
“Officer and a Gentleman” loans
Mortgage Market Meltdown

6. What’s Next For Real Estate
Fewer potential buyers
Increasing inventory
Increasing foreclosures
Increased pricing pressure
Mortgage Market Meltdown

7. Borrowers Who Are Impacted
Caught in contagion: Non-Conforming
Stated income/asset borrowers Alt-A
No-doc Loans
Still free to roam: Conforming and Gov’t
Vanilla Fannie Mae: Full-doc type
Some stated deals still exist
FHA & VA
Don’t get too comfortable
Mortgage Market Meltdown

8. Critical Question
What would your life be like if you didn’t sell your home in the next 12 months?
What would your life be like if you closed 50% fewer deals in the next twelve months?
Mortgage Market Meltdown

9. It Doesn’t Have to Be This Way
There are opportunities
Sellers
Buyers & Investors
Mortgage Market Meltdown

10. Action Steps for Sellers
Get real about price
Consider seller-held seconds
Beware of the non pre-approved buyer
Get your financial house in order
Mortgage Market Meltdown

11. Action Steps for Buyers
100% financing programs have seen severe cutbacks
PMI: not so bad & possibly deductible
Get your credit in order
Get your docs in order
Tax returns, bank statements, pay stubs
Mortgage Market Meltdown

12. Not a Buyer or Seller Just Yet?
Still critical to make sure credit is in order now
Allows time to fix anything before you do become a buyer
Make sure you know what kind of loan you have now – grab your closing docs and review with trusted mortgage professional
Mortgage Market Meltdown

13. FICO Scores Rule the Land
720, 680, and 620 scores. That means exceptions (and Elvis) have left the building
Credit repair is paramount
Routine credit monitoring – annual review
Start credit review process 3-6 months in advance
Mortgage Market Meltdown

14. Full Doc is Back With a Vengeance
Many lenders have killed Stated/No Doc
Where available, it’s more expensive
Provable income, assets, and good credit
Mortgage Market Meltdown

15. Partnerships Are Critical
Not the time to shop lenders!
You need one “go-to” lender
Wide array of available product
Expert in underwriting
“Credit analysis and repair” partnerships
Local and accountable
Mortgage Market Meltdown

16. Future Possibilities Subprime was 12.75% of all 2006 loans
There is still massive opportunity here!
Keep your head up
Mortgage Market Meltdown

17. Get Prepared Sellers Buyers Choose the right Realtor!
Educated sellers set realistic prices
Get your house in order – Best Shape/Right Price
Work only with Pre-Approved Buyers
Buyers
Due diligence
Don’t be a cab driver
Real Estate investors: Cultivate relationships
Mortgage Market Meltdown

18. Next Steps Seller Action Meetings Buyer Action Meetings
Expect Realtor to provide realistic information – you may not like what you’ll hear
Risk analysis meeting involving lender
How willing are you to navigate troubled waters?
Demand Realtor to promote your home to aggressive Buyers Agents
Buyer Action Meetings
Pick the right lender
Get pre-approved not pre-qualified
Be realistic with sellers
Have your Realtor aggressively promote you to other selling agents
Mortgage Market Meltdown