Real Estate Meltdown Of 2008 And How It Affected Non-QM Mortgages

Gustan Cho Associates

Real Estate Meltdown Of 2008 And How It Affected Non-QM Mortgages

This BLOG On Real Estate Meltdown Of 2008 And How It Affected Non-QM Mortgages Was UPDATED On June 8th, 2019

Real Estate Meltdown Of 2008 And How It Affected Non-QM Mortgages
Gustan Cho Associates

Until 2008, home values have been consistently appreciating year after year for 15 plus years. Nobody in the world ever thought that the real estate and credit markets would crash. Real Estate Investments was considered one of the safest investments in the world.

  • Investing in real estate was the hottest ticket in town throughout the United States
  • Many Americans had second, third, fourth homes and even the most novice real estate investor were flipping homes for quick profits
  • Property values tripled in Florida, Texas, Alabama, Kansas, Ohio, New Jersey, Georgia, California, Illinois, Arizona, and Nevada as well as other states were consistently appreciating year after year
  • Investors believed that investing in real estate was the safest and most sure investment
  • Investors were leveraging their homes to purchase second homes and investment homes
  • Everyone made good money from investing in real estate
  • Then the real estate and credit meltdown of 2008 struck this country like a tornado
  • Values of homes plummeted everywhere
  • Homeowners lost all of their equity in their homes
  • A large percentage of them had mortgage loans that were higher than the value of their homes
  • Flocks of hard-working Americans filed bankruptcies and were turning in their keys to mortgage lenders
  • Foreclosure rates have skyrocketed. 
  • There was no such thing as fair market value for residential homes

Mortgage Industry And Real Estate Meltdown

Mortgage Industry And Real Estate Meltdown
Gustan Cho Associates

The whole mortgage industry caved in back in 2008.

  • New rules and regulations were enacted and implemented
  • Over half of this country’s mortgage loan originators were forced out of business due to the credit and real estate meltdown
  • Over half of this country’s mortgage companies have closed their doors
  • Smaller banks throughout the country were closing on every street corner and the larger banks were gobbling them up
  • Thousands of mortgage banks also closed their doors due to the financial and real estate meltdown
  • The subprime mortgage market went out of business
  • Bank statement mortgage loans for self-employed borrowers were completely wiped off the market

Mortgage Regulations Enacted Due To Credit And Real Estate Meltdown

Mortgage Regulations Enacted Due To Credit And Real Estate Meltdown
Gustan Cho Associates

Due to the credit and real estate meltdown of 2008, thousands of new mortgage laws and regulations were enacted.

  • The SAFE Act and the Dodd-Frank act were enacted and implemented
  • All mortgage loan originators who were mortgage bankers or mortgage brokers had to undergo major licensing requirements
  • Mortgage loan originators were required to take a Federal exam and an individual state exam for each state they were planning on originating mortgage loans
  • Mortgage bankers and mortgage brokers had to undergo intensive Federal and state criminal background investigations and personal credit background checks
  • Credit background checks are required for all mortgage bankers and mortgage brokers every year. 
  • Employees of banks were exempt from licensing requirements

Recovery Of Real Estate Collapse

Recovery Of Real Estate Collapse
Gustan Cho Associates

It has been half a decade since the Great Real Estate Meltdown of 2008.

  • Housing values have stabilized and home sales are picking up slowly
  • The Federal Housing Administration has created phenomenal mortgage loan programs for first time home buyers and for home buyers who have had prior bad credit
  • Costs and fees to get FHA mortgage loans has been steadily increasing
  • Mortgage rules and regulations change on a monthly basis and I do not see in any easing with mortgage regulations
  • A mortgage loan originator needs to check on new mortgage rules and regulations on a daily basis in order for him or her to be competent in the business

Non-QM Mortgages

Non-QM Mortgages
Gustan Cho Associates

Non-QM Mortgages made a comeback. Self-employed borrowers can now qualify for bank statement loans for self-employed borrowers with no income tax returns with Non-QM Loans. Non-QM Loans are alternative types of financing where borrowers who do not meet government and/or conforming mortgage guidelines can qualify. There is no waiting period requirements after bankruptcy and/or foreclosure with Non-QM Loans. Late payments in the past 12 months are allowed. The maximum loan limits on Non-QM Mortgages is normally $3 Million. Borrowers who need higher than $3 Million Loan Limit Non-QM Loans can do so but the loan to value requirements is lower. Non-QM Lenders often make exceptions to qualified borrowers who do not meet the Lending Guidelines on Non-QM Mortgages. For more information on Non-QM Mortgages, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.

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