Today I came across this <a href="http://online.wsj.com/article/SB123940575642209823.html">article</a> and I wanted to shear it with you. This article mentions some interesting statistics that makes me wonder, WHY? FHA loans are FULL DOCS; applicants must disclose and verify income in order to (in must cases) pass the manual underwriting approval. After reading the whole article I come to the conclusion that we as professionals (lenders, Realtors, and sure counselors) need to do a better job educating consumers.
Now, I agreed that educating consumers on what is best for them sometimes can be tricked, why? Because sometime you cannot educate someone who are not willing to listening or just have an idea and no matter what your advice is they will do what they think is best for them.
So, what we should do as professional? First always be honest, remember "If you are thinking with your wallet, you are probably doing something wrong, or at least unethical". Secondly, explaining all the facts, advice your client the best of your knowledge, even is this is something you know they wouldn't like to hear. And last, be prepared to fired your clients or at the very least let them know that you preferred not to be part of the transaction that your experience tell you is a bad deal for your client.
Recently, I qualified a client (a family of 4) who is currently leaving with his brother in law, paying only $350 a month on rent. When I asking if he had saved some money to buy his house, he said NO, I advised him to review his family budget and save some money, that it was not a good idea buying a home without any money even if I could helping get first time buyer assistance.
Few days later he called me asking me the name of the DPA program, he was applying with a different bank, and I give him the information and wishing good luck. I have not heard from him ever since, but I am sure if he buys a home now he will be joining the growing army of homeowners losing their home to foreclosure even if they were FHA approved.