MORTGAGE CRISIS, FINANCIAL FAILURES, FORECLOSURES!

We've seen all the headlines. The reporting is getting old and boring except that it commands our attention. And in it all, no one has any plausible or credible news about why this happened so fast. One of the best comments of the last three weeks was the comment made by a talking-head on CNBC's "Squawkbox": "We have all this volatility but no insight." That is absolutely the best, truest comment on this whole fiasco and the most succinct summary.

The speed with which this crisis exploded startled everyone. At the beginning of the 2007 (Summer '07?) no one would have predicted such a seismic shake-up that every industry related to mortgage lending has experienced. "Worry" seems to be the central focus.

What to Do?

Some things Mindy and I are doing with our clients:

• We're talking about the "quality" of the deal/offer with our Sellers - will the Buyers get funded for the closing?
• With buyers, the decision may be more whether to seek a conventional loan versus a "Jumbo". Conventional loans and rates seem to be holding up well and the mortgage folks we speak with feel pretty comfortable in that realm; Jumbos on the other hand are a different story.
• We encourage buyers to have frequent and substantive conversations about their loans with their financial/loan manager.
• We encourage buyers, especially first-time buyers to get what we call a "fiscal check-up" from a reputable loan officer. They need to know how they stack up for a loan, what kind of loan and what their monthly payments will be. Also, armed with this information, these buyers are much stronger buyers.

We also continue to debate how this industry shake-up will affect the residential real estate market on the North Shore. And, oh what a shock, someone found a way to publicize this crisis with an Internet site! In some ways it's fascinating and I visit the site every morning, sometimes a few times a day. I must have a morbid interest that so many familiar names appear on the list. My guess (fear?) is that the list of recognizable names is going to grow, especially after Labor Day. The site is called "The Mortgage Lender" and its feature, the "Implode-O-meter". For a list of finance companies that have shuttered their doors or ceased operations, click here. (Would it surprise anyone if there were a market for bets on the demise of mortgage departments at Wells Fargo? Washington Mutual? Other big brand names?)

A while ago we suggested that the real estate market had evolved BACK to being a "real" real estate market in which buyers buy because they really want the house, not because they fear the next buyer might buy it out from under them. Today buyers take longer to buy: they shop until they find the right house sometimes seeing upwards of 30 houses; they negotiate harder (usually from low ball offers); and then they sweat getting a mortgage. Talk about the quality of an offer - these buyers tend to be much more informed and really ready to buy.

Well, check back. We'll update this a little more often with news.

DS