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Trade group says raising the limits on FHA and conforming loans could quell a possible recession
- 47 percent of brokers say recession possible due to housing crisis
- April-June, 2008, best time to buy a home
- Housing prices to decrease slightly in 2008
- Loan qualification will be more difficult as lending standards tighten
SACRAMENTO, CA (December 17, 2007) – The California Association of Mortgage Brokers (CAMB) today issued its Sixth Annual Mortgage Forecast projecting that the 2007 "Credit Crunch" and the continued tightening of lending standards could drive the state into a recession next year if the limit for conforming loans is not raised in California. Housing prices across California are projected to decline slightly offering first-time homebuyers a window of opportunity to realize the American Dream of homeownership. For home shoppers, the second quarter of 2008 is likely to be the best time to get a good deal on a new or existing home.
"While home prices will continue to decrease into 2008, more stable loan products will reappear for consumers looking to purchase a home," said Pete Ogilvie, president of the California Association of Mortgage Brokers. "CAMB members are optimistic that the Federal Housing Administration (FHA) loan will resurface in popularity with the assistance of the necessary federal reforms that will raise the loan limit to meet the needs of California's borrowers. In order to keep our economy strong, the federal government needs to recognize California as high cost state in order to help consumers qualify for stable loans and avoid a possible recession."
CAMB surveyed its membership during the month of November, 2007, a majority with more than a decade of experience. Survey highlights include the following:
- Thirty-one (31) percent of members believe that April-June of 2008 will be the best time to buy, while 28 percent believe January-March will be the time. Others (21 percent) felt that October-December would be the right time with the remaining 19 percent predicting July-September.
- Forty-eight (48) percent of members believe that housing affordability will get a little better in 2008, while 17 percent believe that affordability will get a lot better. 15 percent of members predict that housing affordability will get a little worse, while 12 percent say it will stay the same, and 7 percent feel it will get much worse.
- When asked if the current housing slump will create a recession in 2008, 47 percent said yes.
- Fifty-nine (59) percent of members believe that qualifying borrowers for loans will be more difficult in 2008. Due to tighter lending standards, borrowers with less-than-perfect credit, who could have easily purchased a home previously, will find it more difficult to qualify for a home loan in the next year.
- However, finding a loan product for a qualified borrower will be more difficult say 41 percent of members surveyed. With high housing prices still high and lending standards constricting, many products have evaporated that would have helped borrowers get into homes.
- Sixty (60) percent of those surveyed believe that cash-out refinances will decrease in 2008 as homeowners will be wary of refinancing at their homes' current market value if prices should continue to decline.
- Fifty-five (55) percent of those surveyed feel that the FHA loan will return to popularity in 2008 while others felt that products such as mortgage insurance (18 percent), temporary buy-downs (13 percent), non-prime (11 percent) and VA loan would rise in popularity.
"2008 will be the year of market self-correction, and should also reward those who have been waiting for affordable housing prices" said Ogilvie. "Forty-three percent of our members feel that the real estate market will not fully rebound until 2009. In order to stem the tide of a possible recession, CAMB is calling upon state and federal legislators to designate California a high cost state, which will increase the limit for conforming loans in California and provide a more stable mortgage product for consumers. CAMB has been a champion for consumers since its inception and will continue the fight in 2008 to keep the dream of homeownership alive for Californians."
Consumers with mortgage questions are encouraged to contact CAMB's toll-free consumer information hotline at 1-866-999-5508 to be connected with a local member or visit the Web site at cambweb.org.
The California Association of Mortgage Brokers is a non-profit organization representing more than 4,000 industry professionals throughout California. CAMB provides ongoing education to industry members, maintains high ethical and professional industry standards, and supports efforts to increase consumer understanding of mortgage broker services. Additional CAMB information can be accessed via the Internet at www.cambweb.org.
(Sacramento, November 20, 2007) – Today, Pete Ogilvie, CMC, President of the California Association of Mortgage Brokers (CAMB), released the following statement regarding Governor Schwarzenegger's plan to streamline procedures with lenders to help keep more subprime borrowers in their homes.
"The California Association of Mortgage Brokers has been a champion for consumers since its inception, and we feel Governor Schwarzenegger's actions today outline the best possible plan for allowing consumers to stay in their homes. CAMB has been at the forefront of this issue since it began, and has aggressively called upon lenders to create procedures that will give borrowers who are struggling to make their payments the resources they need to modify their loans and stay in their homes.
CAMB applauds the Governor for his continued efforts to lobby Congress to raise loan limits for FHA and conforming loans in California. These efforts will greatly benefit homebuyers, making the American Dream of homeownership more attainable in California."
Members of the media who would be interested in speaking with CAMB president Pete Ogilvie regarding Governor Schwarzenegger's remarks should call Clay Merrill at 916-448-5802.
Brokers Available to Discuss What Consumers Need to Know Before They Sign on the Dotted Line
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CAMB is warning consumers to be aware of advertisements that encourage consumers to refinance their homes in order to pay off holiday debt. Numerous advertisements have been appearing across the state in mailboxes and on fax machines offering loan programs with various incentives from free appraisals to no loan fees. The same advertisements also claim to offer loan programs with rates as low as 1 percent and some are even lower. These ads also state that consumers with poor credit or a recent bankruptcy or foreclosure can get approved for these loans.
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CAMB issued its annual Mortgage Forecast projecting that interest rates will remain favorable in 2007 with the rates likely to remain within one percent (1%) of current low levels. Additionally, recent homebuyers (within the last several years) who used an interest-only or adjustable rate mortgage are turning to fixed rate loans as they refinance and take advantage of equity. However, despite the recent stabilization of the housing market, many new buyers are still forced into alternative loan products due to high housing prices. Finally, for home shoppers, the first half of 2007 is likely to be the best time to get a good deal on a new or existing home.
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Mortgage "Check-Ups" to Prevent Financial Decay
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Click here for CAMB's Consumer Tips
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Download Consumer Protection Action Plan (pdf)
The California Association of Mortgage Brokers (CAMB) hails Governor Arnold Schwarzenegger and members of the California State Legislature as CAMB-sponsored consumer protection legislation (AB 790 and AB 2890) were signed into law.
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