In 2005 and 2006 everyone who had a name could get a traditional mortgage, but then the economy changed, and prices started to fall. Homes are now worth less than they were when people bought them. The mortgage industry is in turmoil and things are looking more and more uncertain each and everyday.
Today we have loan guidelines changing 3 or 4 times a day and even the underwriters can't keep up with all the guideline changes. But at the same time even when a qualified buyer produces a down payment and has a good credit score, they still won't sign off on loans. They are afraid to give a person a loan that may later, even remotely, default because it could be their job now.
But, what happens if they start to give no one loans? It is almost getting to that point from what I've seen and if this happens they will lose their jobs anyway as the companies are going to have to start laying underwriters off, because they have no income coming in to the banks.
In the last 2 months, I've had well qualified buyers, who passed the automatic underwriting guidelines, get told 3 days before close that the banks guidelines have changed and they no longer will give them a loan, even if they bring in more money.
As a nation, it amazes me that when something goes south, we panic and do the exact opposite of what we should do. Think about the stock market, traditionally, when the stock market starts to crash, people start to sell their stocks while the rich start to buy. There is a reason this works, they don't panic and over react and at this point in our mortgage crisis, this is exactly what I see happening. People are panicking and doing the exact opposite of what they should be doing.
There are so many options out there that should be looked at to help people who are in trouble that would keep the banks from losing millions, but they would rather overreact and lose even more.
When are we going to figure out doing what may feel wrong may actually be the right thing to do? We aren't trying to break the bank we are actually trying to fix it!
Todd Clark - broker
Kastings & Associates
Phone: (503)524-9494
Fax: (503)622-8739
Photo by woodsy
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Absolutely!!! The lenders have now created there own problems by becoming so extreme on the other end of the spectrum. Unfortunately, it is the consumers that are paying the price. Not only is it stalling the purchase market, but it has also created the foreclosure market by refusing qualified people from refinancing.
Jacqueline Cliff
Re/Max Champions, ABR
All City Mortgage
Seattle Washington