Saturday, August 11, 2007

How is the Tulsa market?

Mortgage industry problems across the nation begin to affect housing in the Tulsa area.Mortgage lenders and brokers across much of the nation have gone into panic mode as they try to assess the damage from the subprime collapse, with many of them focused simply on survival. The effects are more muted in Tulsa, though officials of local mortgage companies disagree on the number of prospective homebuyers who may become shut out of the market. Jeff Allen, owner of Associated Mortgage Corp. of Tulsa, said Friday that the national market's problems may compound and eventually hamper increasing numbers of loan applicants. "At this point it's not affecting us, but it will ultimately slow down the market," he said. The crunch was seeded several years ago at the start of the housing boom, when more and more people with poor credit obtained attractive but risky loans -- the so-called subprime market. The loans often included triggers that dramatically increased monthly payment to levels that borrowers could not afford after a few years, said Ron Sumner, president of the Greater Tulsa Association
of Realtors. As increasing numbers of loans hit those triggers, so did the number of defaults. As a result, financial troubles have hit many large mortgage lenders and brokers that specialized in customers with poor credit, and the resulting crunch has shaken international finances. Sumner said Oklahoma was shielded from most of the fallout due to the state's low property values. "(Subprime) loans were made here, but they were made more frequently in markets where housing prices were rising much more quickly since the homes were more expensive," he said. Steve Admire of Advantage One Mortgage in Tulsa said Friday that local buyers with low credit scores are out of luck. "The availability of credit to less-than-perfect credit lines has evaporated in the last couple weeks," he said. Allen, whose company has provided loans for such people, said he's no longer able to lend to that demographic. "Loans we were able to make two days ago we aren't able to make today," he said. But it's not out of fear of defaults, he said. Instead, the investors who provide money for his loans have lost their appetite for subprime mortgages and are tightening their standards. "If you don't have investors buying them (mortgages), it takes them away," he said. And they're being taken away quickly. Allen said investors often pull out overnight, with no advance warning. If a local home buyer is in the process of getting such a loan approved, he'll suddenly find the application rejected. But Allen said the change was necessary, since many of the loans were given to people borrowing well beyond their means. Buyers who haven't been deemed credit risks aren't as affected, Admire said. Many of the adjustments are being made in the subprime market and in "jumbo" mortgages, which are loans over $417,000. "We haven't seen the lenders clamping down on all grades of credit yet," he said. Admire said his business only offers conventional mortgages, so it has not been affected by problems in the subprime market. David Laughlin, president of BOk Mortgage, said his company has also avoided problems, since BOk's portfolio includes relatively few borrowers with low credit ratings. "BOk has a conservative lending approach," he said. "We don't try to put a square peg in a round hole when it comes to getting a borrower into a loan." Laughlin said BOk's loan requirements, offered chiefly through Freddie Mac and Jennie Mae, have become somewhat stricter, though it's been manageable so far. "The agency guidelines have been tightened, and they've changed their pricing on some products they deem more risky," he said. "But our application and funding volume has stayed steady." Admire said his company's conventional mortgages, offered through Fannie Mae and Freddie Mac, haven't been affected. Most lenders say they don't believe credit will dry up significantly in Oklahoma. Laughlin said standards will continue to tighten, and a few borrowers with average credit may have trouble finding mortgages. "They'll be somewhat restrictive, but truly qualified borrowers can still get loans," he said. Actually, the subprime crunch may become an advantage for Oklahoma, since the area is much less affected than other states, Laughlin said. "Hopefully, Oklahoma will benefit from this," he said. "People may find the affordability and availability of credit here to be an oasis."

According to the Tulsa World Newspaper

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