Approved Home Loans No Longer Done Deals

"There will be deals that fall through," Cecala said. "It's not easy to transfer a loan and all that paperwork. And it's not that easy for one lender to take the other lender's word for everything. In cases, if a lender has gone bankrupt, a lot of people won't want to touch their loans because they think there's shoddy underwriting involved."

At the greatest disadvantage are subprime borrowers, typically people with blemished credit. If their loans fall through, there are fewer lenders willing or available to accommodate them. More than half of the 25 largest subprime lenders have left the business this year, Cecala said. The firms that remain have fewer products to offer.

While bankruptcies and other lender problems can be disruptive for people taking out new loans, they have little effect on existing borrowers, who must continue making their payments to whoever manages the loans.

To increase liquidity for people with less-than-stellar credit, Freddie Mac, one of the largest investors in U.S. home mortgages, said yesterday that it plans to make a 90-day commitment to purchase what are called Alt-A mortgages, which are made to borrowers who provide less documentation about income and employment than the more-creditworthy prime borrowers.

The lenders' preference for people with great credit, high income and cash in the bank is simply "the way of the lending world these days," said Matt Zaborsky, a mortgage broker and president of NORMortgage in Maryland. "The cream of the crop, the well-heeled borrower is going to have less trouble getting what they want."

In fact, the existing lenders are now chasing the prime borrowers the others have left behind.

That was what First Savings had in mind when it took on the Iversen loan. Larry Pratt, the McLean mortgage bank's president and chief executive, said his institution has accepted about two dozen similar loan transfers in the past 10 days.

To avoid the high drama that the Iversens endured, Pratt advises home buyers to move quickly. "All consumers who are purchasing a house should write a real short settlement date into their contracts. Two weeks is reasonable," he said. "That's just the best way to protect themselves from the volatility and quick changes in this market."

That's because even people with great credit may find that a new lender that picks up their loan may not grant the same favorable terms, said Jeanette R. Binstock, a mortgage broker and owner of Mortgage Network in Rockville. Binstock cites a client who lost his loan after a lender closed shop and ended up with a loan at a higher rate.

"What I'm telling people is that they should not shop around for the lowest rate necessarily," Binstock said. "Go with the lender who you think is going to be there in the end."