Times have changed – definitely, for the worse – for more than half the lenders who dominated the Sacramento-area mortgage market during the excesses of the housing boom.
Some are gone, ruined by loans made here and elsewhere that turned bad. Some are on the ropes.
But others are stronger for having kept their feet on the brake pedal when most institutions sped into the fast lane.
From June 2005 to June 2007, the region's top 10 lenders made 176,451 purchase, refinance and home equity loans in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to DataQuick Information Systems.
Many of these loans, offering adjustable rates and no requirements for down payments, fueled the final burst of the housing boom through the end of 2005 and into early 2006. Later, the lending continued for thousands of buyers who didn't yet realize that the market was sliding backward.
Today, many who got loans during that two-year period are struggling. Almost all who made small or no down payments on purchase loans now owe more than their homes' worth. Many lost the battle and have gone into foreclosure.
Things haven't gone well for most of the region's top 10 lenders during that period, as you can see from the graphic accompanying this column.
Nor have the past 10 days or so been a time of joy for anyone in the lending industry. The entire U.S. mortgage market seemed to be sliding off a cliff with the troubles of government-backed mortgage giants Freddie Mac and Fannie Mae.
Local mortgage brokers admitted to being scared. They warned that if either collapsed, the housing economy would follow. At the same time, the feds ended up seizing Pasadena-based IndyMac Bank, a big mortgage lender.
On Monday, the Federal Reserve and U.S. Treasury Department announced a plan to back up "Freddie and Fannie." The two buy home loans from lenders so the lenders can make more loans.
But that was tempered by the pounding that frightened financial markets were giving to banks, especially Washington Mutual and National City. Both were said to be on the endangered list because of troubled mortgages.
By Thursday, Freddie Mac and Fannie Mae stocks were up again. Investors cheered better earnings reports from Wells Fargo and JPMorgan Chase.
It almost seemed as if the real estate industry might relax a little.
"I certainly think the anxiety has gone away," said Jay Brinkmann, vice president of research and economics at the Mortgage Bankers Association in Washington, D.C. "I think Treasury, the Fed and everyone else decided to act before the ball started rolling. As much as anything, their talk of support just really calmed the markets this week."
The good news was that mortgage rates didn't follow the news. The benchmark 30-year fixed-rate loan fell on average to 6.26 percent nationally, Freddie Mac reported Thursday. That was down from 6.37 percent.
A year ago this week, rates were at 6.73 percent.
Brinkmann breathed a sigh of relief over the fall in rates. "In that sense, it was a nonevent," he said of the turmoil during the week.
Rocklin gets noticed
Rocklin real estate agents have received a huge gift from Family Circle magazine. The magazine, with a circulation of 3.8 million, named the Placer County city of 53,000 its sixth best U.S. town for families.
The magazine's profile largely focused on Rocklin's "green" mentality, including its reduction of greenhouse gases and installation of solar panels to power the police station.
Others in the top 10: South Burlington, Vt.; Oro Valley, Ariz.; Brunswick, Ohio; Shoreview, Minn.; Wheeling, Ill.; Webster Grove, Mo.; Broken Arrow, Okla.; Royal Palm Beach, Fla.; and Ankeny, Iowa.
Reynen faces foreclosure
Prominent Sacramento home builder John Reynen could lose his home to the bank.
Reynen, co-founder of Sacramento's Reynen & Bardis Communities, filed for personal bankruptcy protection in April. His debts exceed $970 million for land bought during the building boom. The property has since collapsed in value.
But this is about his house, not the business. Reynen spokeswoman Michele McCormick says the builder has missed payments on a $1.5 million home loan from Bank of America.
Attorneys for the Charlotte, N.C.-based bank filed a request July 10 with the U.S. Bankruptcy Court's Eastern District to lift a blocking action that keeps creditors from seizing the builder's property.
In an earlier bankruptcy filing, the home was valued at $3.6 million.
A hearing on the BofA motion is scheduled Aug. 12.
Call The Bee's Jim Wasserman, (916) 321-1102. Read his Home Front blog at www.sacbee.com/blogs.
