I keep on hearing about today's guidelines being ultra conservative or that the "Banks" don't want to lend money. The first point I'm not sure I agree with, the latter is a convenient place to place blame, in my opinion.

Conservative

If you have entered the real estate field in almost any capacity in the last 5-7 years you must feel that today's guidelines are very conservative, ultra conservative probably. I mean just 3-4 years ago lenders were willing to write a 100%, stated income, investor loan. Well as a lender I have one comment for that particular program;

What IDIOT designed the guidelines for that one! 

My sincere apologies to the idiot, after all someone bought it from them!

Okay, so if the client had a pulse and wanted a house, or even if they didn't, they could have one!

Now we want tax returns, w2's paystubs, bank statements, your mother's maiden name, your shoe size, and other pertinent information as determined by an "underwriter." AND we want this information from everyone, no exceptions!

Traditional

For the above referenced "newbies," and while 5-7 years experience doesn't sound like you're new, in the big picture or today's world, you are.   

Yes, we want the above referenced documentation and possibly more. This is what we used to ask for when people paid us back. That sounds like a pretty simplistic viewpoint, but we did have a better track record of being repaid when we required this type of documentation.

We based our loan decisions on your ability to repay the loan, known as capacity. Your desire to do so, known as charactor. A history of saving or cash reserves, known as capitalization. And a decent property quality, know as collateral. If you were strong, or at least acceptable in these areas we gave you a loan.

A greater influence was placed on the opinion of human beings than on things such as a computer program/approval, as we didn't have those.

The "Banks" also had portfolio loans, loans where they actually lent their own money, for their best customers who didn't fit into the above guideliones. They were considered a higher risk and received a higher rate. Imagine that!

So, what's better? Conservative or Traditional guidelines?

Well for me personally, it's copout time! There's just got to be some middle ground.

Hope we find it soon!