The banks are still hesitant to make loans to homeowners. They just don't want the risk. They took the risk and look where it got them. Lenders are now looking for new metrics, actuary tables and analytics to protect them from getting stuck with bad loans.
What you needed to buy a house a couple of years ago were a good credit score, proof of funds and an appraisal. New regulations are coming that will expand the entire criteria spectrum. What lenders are now looking for is what is called "Future Trending"
To gather data for Future Trending you first need history on the borrowers FICO score. Instead of accepting your current score they want to go back in your History and see what you've been doing in the past. What that means exactly and how far back they are planning to go - well who knows. You just better hope you paid for those pretzelsticks and milk cartons in Kindergarten.
To achieve proper and accurate Future Trending Profiling geographical areas will have to be accessed. Where you currently live and where you may have lived before will make a difference whether you get that house or wind up in a cold-water flat. The strength or weakness of the economy in your neighborhood will also be a determining factors in the Future Trending Analysis. Good luck if you live in a place like Detroit. Better off moving to Washing DC if you want good profiling - there's lots of money there.
The banks will have no choice but to take into consideration how stable your job may be. How is it now? What was it like in the past? How does the future look? Do you have a history of climbing the ladder of success or are you one of those who hide their ass behind the water cooler? Hopefully you've been working hard and the boss likes you and your company looks stable, and you shake everybodies hand when you arrive at work in the the morning and bring doughnuts. It is a plus if you have given the janitors and custodians of the building Chistmas Presents every year. It doesn't have to be anything big - just something to show your appreciation for those less fortunate than yourself bolsters up your points on the character profile chart.
They want to know everthing, and they want to know everything as soon as possible so they can sell your information to other people and institutions who don't want to lend money to shady characters. They also want to know if the industry you are working in and thriving in today will be a viable industry tomorrow. If they determine that it's not, well somebody else just might get that house you were dreaming about. If you working at NASA I'd get out right now. They always have problems with budget cuts and there's a slim chance they'll be building a rocket to make it to Mars in the next ten years. So all you Astro Physicists should think about a career change.
Isn't it tough enough to get a loan right now? As the banks become more and more risks adverse and they keep throwing up all this new criteria how many people will actually qualify for a loan? One out of Ten - maybe. And how are the lenders going collect and sift through all of this data? Will they use more tax money to build this system? Will they use your money to turn the screws on you one more time just for fun and good measure?
Let's say you get all of this data, compile it and do the market research. You then come up with and employ this risk adverse model that is supposed to hedge all bets. You have computers humming, guys with white suits sitting in front of monitors with sharpened pencils and the best predictive analytics ever devised by man. Now somebody gets sick. Somebody gets divorced. Sombody starts taking drugs and drinks. Somebody goes nuts. How can any system or model ever predict what is going to happen in someone's life. A safer bet and a more accurate prediction can be done on the value of a property. The banks are better off hedging their bets off of LTV than they are on the next turn someone might take on the highway of life.
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