Mortgage lenders have closed in record numbers in 2007, here is why:

A large number of lenders have been forced out of the mortgage business over the past month. There are many reasons why this has occurred but one of the largest has been the credit issues that are occurring in the secondary lending market as a result of the fallout from the sub prime loan industry. To better understand what has happened, you need to understand that a majority of medium to large lenders fund mortgage based on warehouse lines of credit. They typically will fund a loan for a consumer using their credit and then sell it on the secondary market for a profit. What has happened is that they have lost the ability to borrow money and therefore they are unable to fund mortgage commitments they have made. This has been a large factor in why so many lenders are being forced to close. © LowRateMortgage.com 8-21-2007

 

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