Mortgage Myth Busters: Realtors can't sell!!! - Because of Tight Mortgage Guidelines?

Realtors can't sell!!! - Because of Tight Mortgage Guidelines?

real estate market

 

Do you feel that today's mortgage gudelines are hurting realtors from selling more homes?

Do you think it could be the buyer not being in a good position?

 

People, I get the fact that lending guidelines have become more strict over the last 12 months. I think I have seen it all in the 18 + years that I have been in the mortgage business. But in my honest opinion, I think the biggest hurdle has been the credit score requirements. But is it a challenge that can be over come in a short time period? Read more for my answer/opinion on this topic.

 

 

 

What prompted me to write about this was this article by Christine Ricciardi - Real Estate agents want subprime alternative for too-strict underwriting - Here are a few statements from the article.

 

realtors stating that down payment requirements are too stringent

I wish I could have interviewed all of these real estate agents. My question would be, "How are these down payment requirements too stringent?"  "Could you please give me examples."

Let's review some facts. You can still get a FHA loan with 3.5 percent down. You also have USDA loans and VA loans which allow for for 100% financing. Sure, there are restrictions for these two types, but it is available. In regards to conventional loans, you can still do 97 percent financing, but the credit score requirements are extremely higher, which is why FHA would work out for more if it was a down payment issue.

Don't get me wrong, I am not one of these "must have skin in the game" type of advocates. FHA loans have been around since 1934 and for the most part, the down payment requirements were 2.25 percent down. So it's up to 3.5 percent now. Yes, depending on the purchase price, that could be another $1,500 to $4,500. But we aren't talking about $10,000 to $20,000 more. People need to stop writing that now is a great time to buy. And buyers need to stop thinking that this is the best time. It's always a great time to buy, when you are in a good position to buy.  Read : When is it a good time to buy a house?

 

 

subprime mortgage alternative

Ouch... I could write a whole book on this statement. "needing a High quality subprime mortgage program" Let's revisit history. In the late 90's, the government forced Fannie Mae and Freddie Mac to make housing more affordable. This is when they came out with 100 percent financing and better yet, when they allowed these same buyers to have back-end ratios of 55 percent. My common sense says that you are just looking for trouble with this equation. We are talking about 55 percent before taxes being taken out. The borrower's gross income. Then the subprime market grew leading into 2000 to 2005, to where these investors would allow 50 to 55 percent one-time ratios, which would be a part of your front-end.

Quick education. Your front-end ratio is your principal & interest, plus taxes and homeowners insurance divided by your gross monthly income. Your back end ratio is the same formula, but adding on all monthly reoccurring debt, such as car payments, credit cards, bank loans, student loans, etc, etc.

The end result was that many investors got greedy and loosened the subprime guidelines. I knew loan officers that would put a decent borrower into a subprime loan because it was easier and quicker than getting them a FHA loan. Yet the FHA loan would have been much cheaper.

My problem with this statement? People making blanket statements, but not offering up solutions. Give me a few good examples of what the "subprime mortgage" should allow.  I hated when people were calling FHA loans the new subprime after the demise of the subprime industry. But from what I know after 18 years, you really can't get much better than an FHA loan that still has decent guidelines than what a subprime mortgage would allow with less down. What could be the main argument? Credit scores....

 

 

 

credit crunch - credit scores

The BAD Credit score argument

I don't want to point the finger at just realtors, because I think many loan officers are just to blame when it comes to credit scores. In my opinion, it's called, "setting your clients expectations to a certain level". We all want to help now. But many mislead or make it sound easy because they might have a 600 credit score program, but don't fully understand it. In my opinion, people should not be waking up one day and say, "I want to buy a house tomorrow". It should take some careful planning and consideration. In reality, people shouldn't be buying a home if their credit and finances are screwed up, especially in the last 12 months. Yes, I understand that things can happen unexpectedly.

Let's take a look at the credit scores. Many lenders want 640 or higher. Some of us can still do down to 620 or even 600. I get that there are some people with 590 credit scores who have decent credit, that would be in the category of 'less than perfect credit', but that they are still a good risk. I just closed on a VA loan in which the borrower had 592 credit scores in December of 2010. When they went to closing, I had their credit scores up to 638. I have another borrower who had a mid score of 598 in January of this year and as of now, their mid score is a 645.

 

 

Conclusion : I am hearing many complain that it's nearly impossible to sell homes because the mortgage guideliness are way too strict.  Yes, you have issues when it comes to conventional loans that will only allow for a 45 percent back-end ratio if the credit score is a 720 or above. Or a back-end ratio of 41 percent for those with a credit score from 680 to 719. All of this is because of the MI companies, the mortgage insurance companies. And yes, you can do lender paid MI and such. But with a FHA loan, you don't have to worry about all of these differences. But given a few of my examples above, you can easily see that if a buyer speaks to a very qualified loan officer, they should be able to buy in 6 months. Sorry, but the mentality with so many realtors and buyers is that they must buy NOW.... and that is not the case. Waiting 3 to 6 months to get their stuff in order is not going to kill anyone. Besides, as I mentioned, buying a home should not be a split second thought, that you get up and do it now. As a buyer, if you know you don't have the best credit now, get with a true professional to help you get to that point. Articles such as the one I mentioned above, makes it sound like it's nearly impossible and because of it, it's hurting the economy. Yes, the economy needs the housing market. But there are way too many tracks that lead to the main station. One needs to truly understand the ins and outs of mortgages, and not just what they hear from each other, aka, water cooler chit chat. Just think about it...

 


UPDATE as of 5-14-11 2:15 pm - I just did some more reading and apparently some of us seem to be on the same page or have some of the same thoughts. The bottom line, many people want it now, and not to work for it. Two excellent reads below... please take the time to read these.

George Souto wrote : I want it now!!

Lenn Harley wrote : Mortgage loan denied!!!  What???  I have excellent credit!! What's going on?

 

 

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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Comment balloon 38 commentsJeff Belonger • May 14 2011 01:08PM

Comments

Jeff, You know how the blame game works...It's easier to blame someone else, than it is to educate yourself of the many new guidelines. I have no such illusions, I let the mortgage experts answer those questions for my buyers, and I haven't have a sale fall apart due to "tougher guidelines this year". So the answer is Realtor quit your bitching and let your buyers get pre-qualified by an expert - it will save you a lot of time and frustration in the short and long run. 

Posted by Steve Loynd, 800-926-5653, White Mountains NH ( Alpine Lakes Real Estate Inc., ) over 9 years ago

One of your best posts, ever.

When I worry about mortgages, it's usually not about the buyer being qualified, it's about the difficulties in getting it done. In my experience, great LOs with great processors can manage the underwriting challenges, but not everyone is as thorough or careful.

I think that the difficulty in proving income is a hindrance to some potential buyers, especially those with 1099 incomes. So many people are no longer in corporate salaried jobs.

I do wish that credit scores were a little less mathematical. Mortgages used to be written locally by people who knew the families and the communities.

Posted by Leslie Ebersole, I help brokers build businesses they love. (Swanepoel T3 Group) over 9 years ago

 

STEVE.... . that is a huge part of my point... so many that complain, but they don't actually do the mortgages. They can only assume from what they hear from that buyer... or possibly that loan officer that has no clue. Or using other examples based on water cooler chit chat... but how does one know the real details, unless their own hands were in the file. Yes, it has gotten tougher... but the main thing has been the credit scores. Anything outside that, in my opinion, might be a bad loan officer that gave everyone hope, but just didn't know their own guidelines until the very end, when it was too late... thanks for your feedback.

 

LESLIE.... well, I think I have written better... or that this would have been better if I could have added like another 500 words of more input... but thank you very much for that polite compliment.'

You do bring up an excellent point regarding income... without the stated or no doc deals, it has hurt some very good buyers... and sure, we do wish credit scores would be lower... but in many cases, it can be worked on... but that buyer might just have to wait 4 to 6 months.

Overall.. I am just getting sick and tired of the complaining... or misleading articles or complaints... when each situation is different... and that I am sure many things are left out or not known when one complains... and I will stick to that statement.. ;o)

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Jeff - I agree with Leslie...one of your best posts ever and considering you put up excellent posts, that is saying a lot.  I have only had 2 buyers in recent years who were not qualified - but by working with a good loan officer for 6 months, they eventually were qualified to buy.  It isn't always possible the next day, as you said, but often, it takes a little work.

I had buyers recently who had been turned down by one lender;  I sent them to another lender whose guidelines on their particular issue (length of time as self employed) were different.  They closed on their new home this past week.  The LO took some time to get them qualified initially so there were no last minute screwups and I think that made the difference.

Posted by Susan Haughton, Susan & Mindy Team...Honesty. Integrity. Results. (Long and Foster REALTORS (703) 470-4545) over 9 years ago

Jeff, Realtors like to one that wrote the blog you mentioned above are a big part of the mess that we are in.  If their buyer could not get a loan under the normal underwriting guidelines, they would direct them to some one that did not abide by those guidelines.

The facts are that there were many others besides the greedy lenders that played a big part in this mess, and this Realtor's blog is a good example of that.

So yes let's bring back subprime loans so we can read more blogs later on how the greedy lenders took advantage of these poor buyers that did not know what they were doing.

Like Steve said it is always easier to blame the other guy.

 

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 9 years ago

IMHO the phrase "Quality subprime" is a n oxymoron. While yes it is tougher ,as you stated, you can still get a good quality loan with a 640 score.But I don't think some people realize the amount of negative(IE:NOT PAYING YOUR DEBTS) marks you can have on a credit report and still be at 640. Yes there are exceptions but if you are below 640, you have not paid more than a couple debts & you just might be a risk to lend 100k or more too.

Nice article Jeff.

Posted by Greg Miller, Florida Home Loans - Conventional,FHA,USDA,VA (Ruoff Home Mortgage ) over 9 years ago

Jeff, Sending a big "AMEN"!  I so agree with you.  Though I can't say that I agree with Leslie and Susan that it's your best.........only because I don't have time to go back and do a critical analysis of your previous posts!  LOL!  You know you have a fan in CA!

Just yesterday I was (once again) lamenting (ranting) about the crazy fact that people so adverse to change get into the mortgage and real estate industry.  Change is inherent in our industry.  DEAL WITH IT!  When I was a wholesale AE I had the opportunity to educate many a broker/loan officer of changes with Fannie/Freddie or govie loans.  I cannot tell you have many times I heard "Fannie/Freddie shouldn't do that" or "Fannie/Freddie need to change that"

OMG!  I am not a lobbyist to Fannie/Freddie!!  Adapt!  And, educate consumers on how to navigate the current market (whatever the change may be).  Amen, Amen, Amen

Posted by Deborah "Dee Dee" Garvin, C2 Financial (C2 Financial) over 9 years ago

Well said. We are in a "I want it now" era, so it can be tricky with younger buyers. If you can download any song you want in seconds, see TV whenever you want on Hulu, order almost anything online, and people are eating a huge percentage of their meals IN their cars, etc. it can be hard to use the word "plan" in a sentence. Delayed gratification is a lost art that needs to be brought back!!

Posted by Sarah Becker (Best Realty) over 9 years ago

 

SUSAN... . hit you a key point, by working with a good loan officer for 6 months. As George Souto wrote in his post, many people want it now... expect that they deserve it now... even if they haven't proven it or think it's not that bad. And sure, some lender's underwriters aren't as tough... at Infinity Home Mortgage, our underwriters try to make deals... but that is a whole different subject.. thanks for the kind words and polite compliment.

GEORGE.... . regarding Christine, who wrote the article... if you go to the article and click on her Twitter link, shye says she first got into mortgages. But I agree, many realtors and loan officers with that outlook were part of the problem... and even more so, the media was and is a big part of the misleading outlook on this subject, by not showing both sides of the fence, and talking about both sides, and disecting both sides... overall, we are both on the same page. Read Deborah's comment also... #7... deal with it, work through the change... and properly educate on the changes... learn it, know it, and work it.  thanks

GREG... .  I am going to semi disagree... I think even down to 600 is good.. but there are some stats that show anything below 620 or 640 is not as good... but why not have it down to 600 and have guidelines that say... if you have lates in the last 6 months, you have to wait... in the last 12 months, you need compensating factors... some checks and balances. But overall, in many cases, if your credit scores are below 600, there is a good reason(s) why... and many people just don't get this still, yet try to blame others... yes, lenders/investors got greedy from 1999 to 2005 and things at times were way too loose... and now everyone is evil for tightening things up.  and thanks for the compliment.

DEBORAH... .  as I mentioned to George, you bring up an excellent point... deal with it.. work it.. and properly educate both the consumer and these realtors that keep saying that banks are slow on purpose or don't want to lend. The bigger banks that are slow and or kill deals at the end.. it's usually because of the sloppy loan officer or an average processor... those are the real facts...  and about my best?  lol  THis would have not been read by as many and maybe not featured if I added more details and my opinions about this subject, which would have been almost 2,000 words total... I love to be detailed on topics like this one... but less people would take the time to read it... that will never make sense to me.. lol  Anyhoo... thanks and see ya around..

SARAH... . excellent comment... spot on. But I blame a lot of what you stated on realtors and loan officers that want quick closings to get their checks.. It it becomes the issue of sticking a lot of shit on the wall, hoping that some of it sticks. In many cases to when I talk to a borrower that didn't close, and we go over everything in detail. In most cases, it was because of their credit, in which needed to be worked on for 3 more months... but everyone involved tried to shove it through the system.  And then when people start to complain on a botched closing, making it sound like lenders don't want to lend... when in reality, the deal should never have been taken.  And thanks for the compliment,.

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

I agree with Dee, change is always going to happen.  We must learn to adapt and go with the flow or things will simply pass us by.  Great post.

Posted by Paula McDonald, Ph.D., Granbury, TX 936-203-0279 (Beam & Branch Realty) over 9 years ago

Wow, Jeff. I think mortgage guidelines are much more sensible today. What I have an issue with is the appraisals not coming in where the appraisers are seemingly trying to undervalue the properties in my opinion. They are giving NOTHING for upgrades and comparing dinged up foreclosures and short sales right alongside when these are not true third-party sales. (This is my new mantra! lol)

You have written so many excellent posts and this is right up there. Realtors who want to push someone to buy today are thinking of themselves and must really need a paycheck. They probably should go find another job.

Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) over 9 years ago

Coming from the Sub Prime era in Mortgages, I say Amen to sensible guidelines.

When I purchased my first home back in 1974, it was an era where you had to have both a down payment and a credit rating and a job, I think we are coming full circle and thats what our economy needs, stability.

Those who have planned both financially and with their credit scores, are our buyers. And I don't want someone who has to scrap their pennies today to put food on the table after paying their mortgage.

I would rather not sell real estate than sell it to someone who shouldn't be buying.

Great article Jeff, and it will be going over to my personal blog as well. Keep up the good work. You are doing an outstanding job on educating the masses.

Posted by Nancy Larson (I am a licensed referral agent in NJ) over 9 years ago

Jeff, I am surpirsed to hear that the credit scores are your biggest hurdle. They have been a prolem, but even a single late payment in the last year has killed some deals.

Posted by Aaron Vaughn, REALTOR© 512-845-4204, My knowledge is your power | eXp Realty (eXp Realty) over 9 years ago

So true Jim, and I thank the good Lord for all that come my way. And actually, a lot of our deals in the second house market are cash deals.

Posted by Nancy Larson (I am a licensed referral agent in NJ) over 9 years ago

Most important is to know the current rules, only then can we know how to package our clients successfully ! 

Posted by Michael J. Perry, Lancaster, PA Relo Specialist (KW Elite ) over 9 years ago

So, if you have to actually prove that you can afford to buy a home that is a bad thing?  People need to wake up, guidelines are not tight. 

FHA loans are getting approved with back-end debt ratios as high as 57%, even FHA Jumbo loans (up to $697,500 in San Diego County).  VA loans get approved with ratios exceeding 60%.  Fannie and Freddie still allow up to 50%.  How much looser do you need?

We were just approved to offer the CHDAP - 3% down payment assistance which gets combined with an FHA first, and the CHF Platinum program which is a 3% grant.  Basically almost zero down FHA loans.

I'm sorry that you can no longer just put a "for sale" sign in the yard and have the home be swept up in the first five minutes.  Time to go back to selling! 

Great post Jeff.

Posted by Kevin Kueneke, San Diego Mortgage Banker (Caliber Home Loans) over 9 years ago

Oh my gosh, more comments on Facebook than here. That is amazing.

 

Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) over 9 years ago

Great  post today, really a good read.  Some great comments here today also.

Thank you. 

 

Patricia/Seacoast NH & ME

 

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) over 9 years ago

Good post!  Lending is finally back to the way it should be.  Being able to get approved for a 100% home loan the day after a bankruptcy discharges, put simply, is a foreclosure waiting to happen.  When I was an LO I remember the selling point from all sub prime account executives was to get those buyers with 580 credit scores into 100% financing and then refinance them into a conventional loan in two or three years once their credit was good enough.  For the most part, the spots on a leopard don't change and to the point you brought up there really has not been enough preperation for the responsibility of such a large debt with that type of credit.

Home loans were taken for granted by the consumer because nearly everyone could get one.  Going into the largest debt a person can have in their lifetime should most definately require an investment.  Cash or time in the military, either one changes the paradigm of the individual on how serious they perceive the commitment they are undertaking.

 

 

Posted by Victor Runkle, VA Real Estate Agent (Cascade Home Sales, Inc.) over 9 years ago

very well written Jeff, I hear it all the time in my own office agents blaming the loan officer are you kidding me?  Sometimes the loan officer discovers things the buyers did not share SURPRISE!  It all comes down to your point of spending time with a client to really educate and prepare them, get them ready to buy.  So many have great credit scores but are surprised when they find out how much down payment/closing costs are no one thinks about that.  I do think it is a good time to buy with the rates which can save buyers money but only if they are ready to move forward and have had that education with a loan officer.  Good to see you back in the blog scene!

Posted by Marilyn Boudreaux, Lake Charles LA Century 21 Realtor (Marilyn Boudreaux, Century 21 Bono Realty) over 9 years ago

Jeff,

Like I said in The Cave, the people buying now are the ones that should have been buying alllllll along.

Posted by Greg Nino, Houston, Texas (RE/MAX Compass, formerly RE/MAX WHP) over 9 years ago

I completely agree.  In my experience it hasn't actually been difficult to get buyers qualified and the ones that aren't able to qualify SHOULDN'T qualify or be buying a home until they clean up credit & save a little money first.  I don't want to sell homes to people that in 2 years will be foreclosures or short sales because they never should have purchased one in the first place.

Posted by Kasey & John Boles, Boise & Meridian, ID Ada/Canyon/Gem/Boise Counties (Jon Gosche Real Estate, LLC - BoiseMeridianRealEstate.com) over 9 years ago

Mortgage guidelines are strict right now and they are affecting what we can do.  I would appreciate being able to sell some of my short sale sellers a home right off the bat instead of making them wait.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) over 9 years ago

I agree that some of the lending guidelines and overt caution the banks are displaying are hindering progress, but I want more sub prime loans like I want a hole in the head. 

Posted by J. Philip Faranda, Broker-Owner (J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY) over 9 years ago

Jeff, glad you're back!  Missed ya'!

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 9 years ago

 

PAULA.... . sounds so easy, right?  But I guess it's easier to complain, without coming up with solutions or changing with the present. And thanks for the polite compliment.

FRANK & SHARON.... . you make an excellent point regarding appraisals... and people just lump that in with mortgages, when it's not the lender who appraises the house. Now, I do know some values have been cut by underwriters, but I find it rare. And yes, I see many realtors and loan officers that push buyers... sad, but it's a fact and part of reality... and thanks for the polite compliments.

NANCY.... . yes, the subprime giudelines were not sensible and look where that got us. Hey, I am not 100% that a buyer needs to be better than good... less than perfect credit is good with me...  just as long as the whole thing makes sense, and that you can prove what happened in the past. And thanks for the kind words and for that polite compliment. Again, thanks

AARON... .  well, what you are talking about is a case-by-case scenario. Just because one would have a late payment doesn't kill a deal. Maybe the back end ratio was very high. And or no reserves left over... sorry, but that is a blind statement in my opinion, because there could have been so many other issues... and many realtors think they know the whole deal. Unless you are actually looking at the deal like a loan officer does... sees the credit, the income, the deposits, and so much more... you just don't know if it was really that one late that killed the deal. And not just because the loan officer said so... I know loan officers that state one reason why a deal was killed and not the real reason, so they don't look bad. I have seen it happen with my own two eyes ..  Just giving my .02 with some thought...

JIM.... .  well, that's easy for a realtor to say and maybe even more so when a good part of their closings are cash buyers. That still doesn't solve the other problems... or that it helps me. Just sayin.  Thanks

NANCY.... .  they don't happen to all realtors...

MICHAEL.... . that would be a great place to start... but I still come across deals that were denied and those buyers were given false reason for such a denial. I look at the credit and the scores are very low... many lates... some collection accounts.. and after talking to the buyer, finding out that the loan officer didn't even go over the collection accounts or ask why they were late. Major Red Flag.. and this has happened more than it should .. and even in the last 6 to 10 months. Sad... and for me, this should be a basic thing to know and understand as a loan officer... outside of how to calculate income, which many don't know how.. again, sad...

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Jeff,

Great article - setting forth the actual facts (like the elephant no one wants to admit to -- that Congress pushed Freddie and Fannie into "making sure everyone could buy a house").

Keep up the good work!  Maybe we will get them educated eventually.

Posted by Steven Cook (No Longer Processing Mortgages.) over 9 years ago

Good advice for agents and buyers. It is important to work with a good loan officer who can guide them. Great post.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 9 years ago

I agree with you! 3.5% isnt too much to put down but I do think it would be helpful if we could evaluate the credit scores a bit differently.  I think a "weighted" score could be helpful.  There are many people who have lost their jobs and started new careers or had to take paycuts in their current career because of the economy.  These folks are having to sell their homes because they can no longer afford the payment.  They would like to turn around and buy another home but their credit score has taken a hit because of the job loss or pay cut but they are responsible borrowers and contrubute to society daily (and it took them 9 months to sell their home before they could get out from under the debt and this put a strain on their credit----but they didnt give up, they kept fighting the fight and kept paying their bills, albeit late some months).

If the credit scores from 2008-2011 could be evaluated on a case by case basis instead of just looking at the score, it could help open up a few opportunities for buyers.  Instead, these buyers cant get a loan to buy a new home and must go into a rental type situation.  They are responsible people who have done the right thing and who know how to budget.  If their credit scores from 2004-2008 could be given 80% of the weight and 2008-2011 be given 20% of the weight to determine the credit score, that could be very helpful for many responsible buyers out there!  Instead of closing the door in the face of everyone that doesnt fit the bill, lets make sure we are keeping responsible people in the home buying market!  We could also implement required financial planning classes that must be completed prior to closing (by the buyer with a credit score from 590-620) and required budgeting workshops for first time homebuyers (prior to closing). 

It amazes me that 2 of the most important decisions one can make, require NO education in order to do it!  That is: having children and buying a home!

For every one home sold there are 2 jobs created. Lets open up the housing market enough to make a difference for everyone! Lets get help to those that deserve it (of course there are borrowers that will not and should not qualify) and get the market rolling again (not in the same way it was before but BETTER!!  Maybe not as many sales but BETTER sales turning out more educated buyers with a PLAN instead of just a "wing and a prayer" type budget)

Realtors and lenders have the same clients and therefore should have similar goals. When a lender tells me about a problem, I respect their position and understand they are just as disappointed as everyone else that things arent going smoothly. We work together to try and fix it and if it cant be fixed we part with a plan for the buyers to get themselves in a position to buy later.  We start on the same team and we end on the same team. Real estate is a team oriented career.  One cannot do it alone!!!

Nuff said.

Posted by Teresa Tedder (Carolina Realty of Wilkes Inc) over 9 years ago

We have yet to find the middle ground and are still in the reactive stage of the recent failings involving this subject matter...In time, methinks water once again, will find its own level..Until then, we have to make bricks without straw...doable, but a lot of extra work...thank you for a relevant and professional post...Jeff

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 9 years ago

 

KEVIN... . that's the whole thing, many think guidelines are tight because it's gotten harder, when they should have been like this all along. What's wrong working with someone that is not 100% ready now, and they buy 6 months to a year from now. thanks and thanks for the compliment..

MISSY... .  yea, it can be amazing.. I have been spacing my posts on my personal FB page and always on my FB fanpage when I write them on my FHA Expert blog... just more exposure and people seem to comment more on facebook... thanks and hope all is well..

PATRICIA.... . thanks for stopping by and for the kind words & compliment.

VICTOR.... . I agree and loans were taken granted for over and over...  and thanks for the compliment.

MARYILYN... . hey, us loan officers and lenders/banks are in front of it all... and as mentioned by someone else, even if the appraisal comes in low, that can be thrown into the whole mortgage equation. ps.. love ur new pic and thanks for the polite compliment.

GREG.... . and that is when it's a great time to buy... when you can afford it... Just so tired of the "It's a great time to buy now" titles over the years..  thanks

JOHN & KASEY.... . well, it still is hard to qualify many, even those with decent credit, but have low credit scores... that can be a challenge at times. But those thrown into home buying, when they should be educated, that has been part of the problem... and when lending was easy, that didn't help.

TNI... . define strict... because they were loosey goosey from 2002 to 2005.. and that got us in the mess that we are in today, besides home values dropping. There are still buyers out there... or those that we can help become buyers in 6 months. It doesn't always happen over night.. just sayin... thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

 

PHIL... . and it makes sense that they tightened down the hatches some, from all of the losses, because so many got greedy.. but you are right, we don't want you having a large hole in your head.  ;o)  ps.. I agree..

PAT... .  thanks Pat.. means a lot and I appreciate that... just got burnt out and needed some down time from blogging...  let's see if I can get my juices flowing again... will have a good series coming up this week, starting on my outside blog, The FHA Expert. thanks and missed ya also..

STEVEN... .  what I truly think we need is for Congress to listen to a few of us, and not those that have each other in their back pockets... or who voted for who...listen to those in the trenches.. and thanks for the compliment and for the kind words.

GITA.... . so many get wrapped up in the loan officer's promises and can't focus on the reality and or what is important... and thanks for the compliment.

TERESA... . as much as your suggestion regarding credit scores sounds good in a way, I think it would lead to more issues... hence why something like FHA is great, because you can do a manual underwrite, even if the system says refer... but as stated, you still have the fico score barrier. Besides, I didn't mention this, but there are some companies that will go down to 580, but below 600, you need 5 or 10% down. My whole point in my examples, that relates to your suggestions... getting the scores from 595 or 610 to 620 or 640 in many cases would just take 2 to 3 months. I have done this a lot with borrowers... so what is wrong with a little time to comply?  Just curious... but yes, a plan is needed and should be required... maybe a written plan signed. These classes and such that you mentioned...  some I disagree with and what they teach, their methods... etc, etc.. To me, many buyers don't listen or get taught the wrong stuff... and I think it is a way for many to make extra money by giving these classes...  who don't have the buyers best interest... thanks for your input and feedback...

RICHIE... . I totally agree, that things are in the middle... that in time, a lot of this will sift itself out... and it has started already in some areas... some programs coming back, etc, etc... thanks for your input and for the kind words..

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Jeff... I like the old saying "excuses are like as*holes. Everyone has one". When you are a Realtor that cant sell a home or a Mortgage Originator that cant close a loan... its always easier to blame someone else or guidelines that are in place. To me it just means I have to work a little harder at finding the right clients or right marketing or right partners to work with... roll with the punches and make it happen.  It may have slowed down, but the Real Estate market has not stopped. Someone is going to close the deal, why shouldnt it be me? Thats how I see it.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) over 9 years ago

Jeff... what happens if this buzz about pending legislation to MANDATE an increase in REQUIRED down payment sets in?  The whole, get rid of Fannie/Freddie, take away FHA's large market share, get buyers with more 'skin' in the game....

If this goes through - things will REALLY change.

 

b

Posted by Brent Kluge, I do mortgages REALLY well and I WON'T RIP YOU OFF (Senior Vice President, Secured Funding Corporation) over 9 years ago

 

JOHN... I couldn't agree more...  someone will always be buying a home, in any market. Sometimes not as many as years past... the end result, know and learn what needs to be done to make it a smooth process and a complete closing.

BRENT... funny that you bring this up... I will be writing about this tomorrow... it's scary when it comes to our so-called leaders, polictians, thinking like they are god. If they make this change for all loans, it will kill the real estate market which will kill the economy. But from what I am finding out, they would only be controlling conventional loans... which in all honesty, won't bother me for the most part... but it would hurt those with excellent credit scores... will explain later. thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

Jeff - Great points on lending standards.  I think the best point you made and I wish I had included it in my blog is the notion of ratios.  When lenders went over 50%, that should have been a huge red flag.  All other criteria aside, if someone is spending half their income on a mortgage, a job loss would put them in trouble really fast.

Posted by Bryan Robertson over 9 years ago

Jeff - Very informative and well explained !  The fact is is that there are a lot of options.  So sometimes folks are informed.  What I would like to see is more products for the self-employed folks who have high credit scores but do not show a lot of income.  Some sort of sub-prime product can be created for these well qualified buyers.  That is what they will originally created for before things spiraled out of control.   Same thing goes for investors as it is so difficult for investors to procure financing, even with 20 percent down sometimes if they already have 4 properties and what not... but that is another story and goes off topic from your blog.

Glad to see this featured and hope it gets read by a lot of folks in the industry and consumers alike !

 

Posted by The Somers Team, Delivering Real Estate Happiness (The Somers Team at KW Philadelphia) over 9 years ago

 

My rebuttal to 20% down...

Is 20 Percent Down the Solution? Would the Real Estate Market then Crumble?

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 9 years ago

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