The days of choosing a mortgage professional based on a personality test and box of donuts in your real estate office is changing. Today with the tightening mortgage guidelines, having a mortgage professional who can review credit, employment, debt to income ratios, calculate assets, document the file and make sure that 2+2= 4 is the smart move for a business partner.

We just got word that in 2nd quarter of 2009, the big mortgage investors are still taking pretty significant losses on performance of their mortgage securities. These are not just the old loans that were originated 2 to 3 years ago with guidelines allowing anyone who could fog a mirror get a home loan, but these are the more recent loans requiring verification of credit and employment for approvals through underwriting. Based on the fact that mortgage backed securities are still not fully performing, investors will start to require stricter guidelines.

We are not too far along of seeing minimum requirements of 660 to 680 credit scores on conventional loans and 640-660 minimum credit scores for FHA and VA loans from the investor overlays.

With the lending environment getting tighter versus looser, it means more mortgage professionals will need to adhere to new guidelines. It will require a mortgage professional who has years of experience and a person dedicated to educating themselves of the new changes.

In recent months, I have heard a new set of complaints from our real estate community of loans denied the day or week of closing. When I speak to someone and hear this my head spins. Further into the conversation, I uncover that the mortgage lender did not master their craft. Some of these folks will not be able to adapt to the new mortgage market. In this particular situation, if the mortgage lender reviewed the file properly from the beginning, he would have discovered in 10 minutes that the borrower should never have received a pre-approval. Instead, the lender was going off old information and wasted not only his time but the clients and all persons involved. This is just another instance that makes our industry look bad.

I am hoping with the new mortgage licensing requirements coming down the peak that some of these lenders will get out of the market. Sub standard pre-approvals do not work today.

I am asking the Real Estate Community to be aware of our always changing market. Now is the time to make the right change in your mortgage business partners for a successful business. The "hand out 3" mortgage lender card rule given to clients in this credit tightening market, is setting your business up for disaster. Seek out a highly knowledgeable mortgage professional and interview them. Make sure they truly know the ins and outs of mortgage lending business. In the long run, this will make your business more profitable and your clients happy with the results.

Gary prides himself on being a professional through every step of the transaction.  He has made a choice of not trying to be a fit for all individuals, but instead choosing to work with those that he is best suited to help.  Having focused knowledge of his client's specific loan programs and products allows Gary to create better and stronger relationships with his customers. 

Gary Miljour has over 15 years of experience in the Real Estate and Mortgage Services Industry.