Yesterday I was approved............Today I am declined
By Michael Mapes, The Responsible Mortgage Lender
If the mortgage lending business was a car then quite frankly ever lender would be in court explaining the speed at which changes have occurred. Once borrowers lined up at the lenders door wanting ever kind of loan and loan product the lender had to offer. Cash out refinance, no problem, 100% -104% financing no problem, marginal credit no problem, little cash in the bank, no problem. Fact is lenders found ever which way to provide loans to people who wanted them.
Alas, Then the Bubble Burst
In November of 2006 the music to the dance started to skip a beat. These loans lenders had been serving up began to default and investors who had provided the capital woke up as the party was ending. As their heads started to clear they began to realize that the loans that they thought were good investments turned out to be rotten apples. Trying to manage the debt obligations and figure out where to go from here led them to tighten the purse strings or just stop buying mortgage securities all together. As lender after lender began to go bankrupt and CEO after CEO began to lose their jobs it has become apparent that it is too little too late.
But my loan was approved yesterday.
As the song goes "yesterday, life had such meaning and now I long for yesterday". Both lenders and borrowers are singing the same tune. Program guidelines have gone through such rapid changes that today, with only a hand full of new products available consumers who were once approved are now finding the doors to capital to finance a home closed. As capital markets have no appetite left for sub prime loans or Alt A loans, those borrowers who can not document their income or have poor credit histories are now on the outside looking in. For many what once was a dream has now turned into a nightmare and lenders who once invested in communities are now trying to just stay afloat.
Analysis suggest that the worse might not be over, However, at interest rates around 6 percent or less in some cases opportunity is still there and while it is true quite a few home buyers can no longer qualify for the house they want. But with hard work you will get there just not 0 to 60 in 5 seconds flat.
As a wise person said to me recently, this situation too will pass.
Michael Mapes can be reached for comment at 757.599.1810 ext 225 or on the web at www.theresponsiblemortgagelender.com
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