Texas Mortgage Problems Hit Houston
One of the nation’s largest mortgage lenders, Houston-based Aegis Mortgage Corp., stopped taking new loans Monday, amid a day of news that signaled tougher days ahead for lenders and buyers.
“It’s a bloodbath out there,” said Mark Cady, senior vice president of Market Street Mortgage in Houston.
The announcement came on the same day New York-based American Home Mortgage Investment Corp. filed for bankruptcy protection.
Falling home prices nationwide and a rise in foreclosures have scared investors away from buying securities backed by mortgage loans.
That, in turn, has led to tougher lending standards and higher interest rates.
For example, late last week, Wells Fargo upped its interest rate for large 30-year fixed rate home loans made through mortgage brokers to 8 percent from 6.875 percent.
Tighter lending practices have led to a housing crunch nationwide as prices skyrocketed and then began to fall, making it harder for people in financial straits to sell their homes.
While Houston home prices have not experienced wild increases, the drop-off in subprime loans has already begun affecting home sales, as buyers with bad credit or little money for a down payment can’t get loans.
“It’s kind of like doing a time out during a Super Bowl,” said Ted C. Jones, senior vice president and chief economist for Stewart Title Guaranty Co., referring to the recent lending cutbacks.
The turmoil in the bad credit mortgage market is affecting buyers and sellers of commercial real estate, as well.
Underwriting guidelines are getting tighter, and “borrowers’ costs have gone up,” said Rusty Tamlyn, a senior managing director in Houston for Holliday Fenoglio Fowler, a commercial mortgage banking firm. On a positive note, the company said there’s still liquidity in the commercial market and there are investors who will pick up the slack.
‘We’re in a fight right now’
Pat Wente, a spokeswoman for Aegis, said the company had notified home mortgage brokers, who help borrowers find loans, that it also would not be able to fund loans currently in the works.
“This mortgage market is hurting everyone and we’re in a fight right now to hold on,” Wente said.
Last week, American Home Mortgage laid off almost 90 percent of its 7,000 employees. National City Corp. also said Monday its wholesale home equity lending division, which serves mortgage brokers, had stopped accepting new loan applications.
While Wente maintains that Aegis’ employees were expected to show up today, some workers expressed uncertainty about their jobs Monday. She said she was not aware of any plans to lay off employees Monday or today.
As of July, the company had about 1,200 employees, of which 300 are in the Houston housing market.
Aegis seemed to be gearing up to be one of the companies that would survive the subprime crisis, said David Zugheri, president of First Houston Mortgage, a mortgage bank and broker.
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