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Mortgage Lenders Implode-o-meter
IS YOUR LENDER ON THE ROCKS?
Mortgage Lenders Implode-o-meter.Did you hear about this? There is a forum group that keeps track of which mortgage companies have gone belly-up, out of biz....called Implode-o-meter. They also monitor those lending companies that are on trembling ground....referred to as Ailing/Watch list Lenders. Notably on that watch list is Sallie Mae, a company that bills itself as the nation's leading provider of student loans. (They're not expected to implode, but start paying your student loans off people....so the next generation can get an education!) Five newly imploded company names were posted on the Implode-o-meter website just yesterday.
Implode-o-meter is an independent source/website who state their standards are more concerned with content, not reputation or resources. But you can bet everyone in the lending business is watching this website. And if you've got a mortgage or are in the loan process you should be watching this list too....and perhaps read the forum comments.
Since late 2006 there have been 226 major lending institutions that have imploded. The criteria to be considered for the implode-o-meter list is that two out of three measures to be met: At least $20 million a month in origination volume, loans processed. At least three states of operation. At least fifty employees. It a loose rule; if the company in question has had a really flashy or nefarious ride down the slippery slope it can be included on the list.
In my mind I have often likened the mortgage crisis to a game of musical chairs where packages of mostly sub-prime loans, many coming due for raised rates and possibly default are auctioned and sold on down the line of investors until suddenly the music stops and someone is left without a seat at the party. As Implode-o-meter says "the music has stopped playing".
It's a complex and convoluted business.... lending money and selling loan products. But you don't have to have a PhD in economics to understand that if the loan officer working on your new financing for the home you want to buy is be drawing from a pool of funders who could be offering a better "deal" because they are on the brink of disaster and want to pump up volume.....your success in buying a home could be at risk.
Here's a nightmare scenario for any buyer....and I have witnessed this several times in my career: At some point during the roughly month long closing process, after the buyer has paid for home inspections, negotiated with the seller, and paid for an appraisal, the lender closes it's doors and/or files bankruptcy. Their assets are gone or frozen and the buyer's loan is....no longer available. The buyer may be able to run quickly and find another lender, but that might take time that the seller is not willing to wait. Contracts would have to be extended in writing. And though that recent appraisal is still worthy and usable....can the buyer get their hands on it? Or is it tied up with the old defunct lender's files, or sitting in the now out of work loan officer's circular file? It's a heartbreaking, jaw-hardening. BAD experience for a buyer, and can rob the joy out of getting into that new home. Or the house may not close at all.
And if the financial institution who is servicing your existing home loan, the one you write the check to, is in trouble....wouldn't you want to know? You may not have much of a say as to where your loan goes next, but you may be in a position to refinance with a better rate and friendlier terms.
A little knowledge goes a long way...check out Implode-o-meter on the web.