Magazine article American Banker

Lenders Fear Origination Slide as Tax Credit Expires

Magazine article American Banker

Lenders Fear Origination Slide as Tax Credit Expires

Article excerpt

Byline: Paul Muolo, National Mortgage News

In recent weeks mortgage lenders have experienced a flurry of new applications from prospective homebuyers who see the April 30 federal tax credit expiration fast approaching and want their $8,000 "gift" from Uncle Sam.

"We're getting calls from people who are frantic and want to get their contracts in," said John Walsh, the chief executive of Total Mortgage Services, a Milford, Conn., nonbank that funds loans in 21 states.

Like many mortgage companies, Walsh's has had decent volumes this year, but he said he fears that once the $8,000 tax credit for first-time homebuyers and a related one for move-up purchasers sunset at month's end, loan officers might be hard pressed for business.

"I could be wrong," Walsh said, "but a lot of customers know the timing of this thing and they realize the end is near."

He said he fears the second half of 2010 could be deadly quiet for new originations.

Brian Benjamin, a loan broker based in the northern New Jersey suburbs, said he too has seen a pickup in applications. "To be eligible" for the tax credit, "they need to get the contract signed by April 30," he said.

Benjamin said he believes that once the tax credits expire, applications will fall - but he's uncertain by how much. He said his biggest worry still is a lack of financing in the jumbo market, a key niche for his Two River Mortgage, which is based in Red Bank but facilitates loans in the New York/New Jersey metropolitan area, including Manhattan.

David Olson of Access Mortgage Research and Consulting Inc. …

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