Well maybe that is a little dramatic, but there is high drama going on in the mortgage business. The rules, they are a changin.

Just this past week American Home Mortgage declared they would no longer be making any home loans. Can you imagine if you have been in escrow for 30-45 days waiting for your loan to fund only to find they are now out of business? Or what if you made a loan application and the loan you thought you were obtaining is no longer available? You may have qualified under a set of criteria, but now the lender has established new guidelines and your previous qualification is now nonexistent.

Anytime you have an industry in crisis (crisis may be a strong term) the rules are subject to daily changes. Volatility replaces predictability. Last week some lenders adjusted the rates on non-conforming loans. Was there an economic justification? No, it appears that it was a simple knee jerk reaction. Maybe it was an attempt to begin replacing some of the revenue they were losing.

If you’re in the market to buy a house how do you protect yourself?

First and foremost, I would find someone whose business is working with home buyers. Not the “I have a friend in the mortgage business” who does three deals a year. Secondly, I would make sure that my mortgage lender has every piece of documentation they needed from me in order to approve my loan, so the only thing they are waiting on is the property address. Lastly, find yourself a couple of well known lenders/mortgage brokers that can successfully navigate this current environment.

I would be looking for two qualifications: (1) knowledge and (2) experience. I have seen too many examples of buyers caught in the middle because they were told “what they wanted to hear”.