The Mortgage Market seems to get tighter every month.  Much of Michigan(and the country) are labeled as soft or declining markets.  This is due to the declining sales in many areas, most of which are brought on by the many foreclosures we read about daily.

The conventional bank type loans have been affected the most.  These loans are seeing general cuts of 5% in LTV(Loan To Value) across the board in most areas of Michigan.   This means borrowers who would have had 0% down, now need 5%.  Those in a 5% down program, now need 10%, and so on. 

Complicating matters, the Mortgage Insurance companies that insure the top part of the loan for those who are putting less than 20% down(you know it as MI or PMI) are now limiting the amount they will insure and are cutting the LTVs even more.  This will get even worse May 1st.   You can be approved for a 5% downpayment by a lender yet required to put 10% down by the Mortgage Insurance company because they won't insure above that level.  The lenders used to push around the MI compnaies and the table have been turned.

So, what do we do???

So far FHA,VA and Rural Development loans have not been affected by this because they play by the governments rules.  These programs are great and the rates are very good.  FHA loan amounts have been raised.   

This tightening will limit some Borrowers and require us in the lending environment to take extreme care of the details of our loans.  It should also "right the ship" from all of the bad programs offered in the last 5 years.

Hang in there.  This year should be very good.

Brendan O'Driscoll
Treadstone Mortgage
25 Commerce Ave SW Suite 100
Grand Rapids, MI 49503
(800)-485-7288 ext 224
brendano@treadstonemortgage.com