Will anyone 2nd that mortgage? Anyone? Anyone at all?

When I was a kid I remember being out in a dinghy in a shallow bay off of Camano Island where I spent several of my 'growing up' years. It was a pretty calm day and the sail tapped lightly on the mast (well, don't know if a dinghy really has a "mast" per se, but the pole that held up the sail).

After a while of staring down into the murky waters the wind started picking up, as did my excitement at the thought of crashing o'er white caps, leaning out of the boat just to keep it from capsizing against the ferocious wind. Well, it was a thought anyway.

I did get a bit of a chance to lean out slightly against the pull of the sail, but the next instant the wind had died, and with no resistance, my shoe slipped (earlier I had imagined I was taking on water and splashed some into the bottom of the boat for dramatic effect), and with a frantic wave of my arms -- right out of the Calvin and Hobbes comic book I had been reading -- over I went splashing into the water. After a dazed/confused/embarrassed moment, I grabbed the lead rope and waded back to shore, pulling behind the dinghy that had evicted me.

So it has been over the past couple of weeks, a strange wind had begun to blow that on Monday, August 6th, 2007, effectively halted nearly all 2nd mortgage activity beyond 80% financing.

Black Monday? Not in my opinion, but a very clear change in direction and for those who were leaning out of the boat riding the once-powerful wind current, many Loan Officers are finding themselves with more than soggy bottoms.

Welcome back to the good ol' days of residential financing. Private Mortgage Insurance, whether they covertly lead a conspiracy to overthrow 2nd mortgage financing or not, is back in lead position when it comes to a down payment of less than 20%.

I of course do not have anything against 2nd mortgage financing, and there are, believe it or not, some options still available. The same goes for 'stated income' loans, nothing against them although they are definitely getting harder to find. Wade cautiously into those waters, however, because me thinks the wind has yet to calm a little more...

--James Wirth