Now that the banks have sucked the money out of our economy and then our government they are now hell bent on holding on to it. It's no secret in the mortgage business that lenders are doing everything they can NOT to lend.
I'm not talking about making risky loans. I'm talking about preventing qualified, responsible people from buying a home. Even when loan applications meet every federal lending guideline the wholesale lenders apply restrictive "credit overlays" to deny mortgage loan applications. Furthermore, it appears that experienced underwriting specialists have been replaced with less costly processors who have no concept of analyzing risk. The cost cutting has also left lenders understaffed and inefficient.
Another tool conspicuously disguised as consumer protection is the new Home Value Code of Conduct. By prohibiting loan originators from ordering appraisals from qualified and licensed local appraisers the banks have found a way to undervalue properties using Appraisal Management Companies (AMC) in which their share ownership. Not only do consumers get overcharged for each appraisal, they also get charged for multiple appraisals whenever the application has to be transferred to another lender even when the same AMC does the additional appraisals. This is the biggest scam ever perpetuated on consumer borrowing!
As if that wasn't enough here's another assault on local mortgage companies and consumers, once again, in the name of consumer protection. Wholesale lenders have capped fees to originators (makes sense) BUT the maximum fees include all the lenders junk fees and the rules do not apply to lenders who are permitted by law not to disclose what they are earning on a loan. In other words, if you can conceal your fees from the borrower the maximum fee limits do not apply!
The bottom line is that no one seems to care that at the other end of all these injustices is an American family trying to own a new home. In the big picture it means jobs for the real estate, construction, insurance. home improvement, and all other related businesses. None of this happens if the banks don't do what they are responsible for doing: lending.