Weekend Ramblings

Just a quick word on the New Century Financial debacle and the events from Friday.  New Century announced that they were not taking any new loan applications.  What they DID NOT announce was that they also ceased funding any loans.  This also affected their little talked about retail conduit that operates under the name of Home 123. 

So think about it for a moment.  Your John and Jane Doe, first time home buyers.  Your loan is approved through Home 123 and you are scheduled to close on your dream come true home purchase next week.  You’ve given notice at your apartment and they already have a new tenant lined up to move in.  But wait, there is a snag!  You get the call on Friday (consumers affected in this way probably do not know yet) and are informed that the lender you choose to do business with is not funding any more loans!  This is a real life scenario that will be played out numerous times in the coming weeks.

Senior management’s response to the crisis was to instruct all of their branches to broker out the loans in the pipeline in order to get them closed.  The reality is that few if any wholesale lenders are going to be willing to accept loan files from an insolvent institution!  We’ll have to see how all of this plays out and hope for the best for the innocent consumers who are affected.

On the brighter side, we are anticipating spring like weather throughout the bay area this weekend.  Some areas with temperatures into the high 70’s. The rain is necessary but it always feels good when that first spring like weekend comes along.  So don’t sit inside reading this stuff too much, be sure to get outside and take advantage of the opportunity.

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