That gig is over, as is the whole liquidity scam (in reality more borrowing to rent overvalued securities), it's yesterday's news, we are at an inflection point. Play Humpty Dumpties are your peril.
These risks numbers are peculiar, but it's the thought that counts, actually assessing it.
Higher risk has lenders wary
By Gregory J. Wilcox, Staff Writer
dailynews.com
Mortgage lenders in California are more critically scrutinizing loan applications now because of higher default risk resulting from a shift in sales patterns as the real estate market nears the end of its boom cycle, an industry tracker said Monday.
During the second half of 2005, risk levels for new mortgages statewide increased 28.6 percent across California from the prior six months, said San Juan Capistrano-based HomeSmartReports.com.
The risk factor is lowest in coastal Southern California and the Bay Area, the company said. The highest risk factor is in rural Central Valley communities.
This is the first time the company issued a risk report, so a historical comparison is not available, said company President Mike Ela. Previously, this information was only available to the industry.
The risk is based on a scale of 1, the lowest, to 100, the highest.
At 6.72 the risk is highest in the Hanford and Corcoran area. The lowest is 0.80 in Orange County and San Diego.
The risk factor in the Los Angeles, Long Beach and Glendale area is 1.44, and in Oxnard, Thousand Oaks and Ventura it is 1.12.
The biggest jumps came in the Salinas and Santa Cruz-Watsonville areas, while the trend was down in rural areas north of Sacramento such as Chico and Yuba City, the company said.
"While the levels may not look excessive, you have some markets where the risk is on the rise," Ela said.
The stressed areas are the ones where buyers are stretching their finances the most to get into a house.
Stepped-up scrutiny means lenders could be asking for more financial information from borrowers and seeking more detailed appraisals of property.
Ela says it also means consumers now need to do more homework to find out whether they might be buying in a stressed area.
The company's site offers free education information and sells other information such as valuation reports.
John Karevoll, an analyst at La Jolla-based DataQuick Information Systems, said this does not signal a major market turn.
"This just means that more loans are now being flagged for further scrutiny than was the case six or nine months ago," he said. "The loan applications may go through just fine."
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