Every day it seems my clients are having a harder time getting a loan to close because of all the questions and proof being required by underwriters today. But, I do have to say that I don’t think this is a bad thing. Between 2005 and 2009, there were case after case of people who got loans because the underwriters weren’t asking the tough questions, they were just taking people on their word.
So, what was the problem? It seems that some of word coming from clients wasn’t their word! What was happening was brokers were falsifying documents to get loans to go through. Now, it didn’t happen often but it did happen. The problem is most of these people are now in foreclosure or bankruptcy because they now can’t afford the lifestyle they bought in to. They were promised in 3years they could refinance in to a lower loan and a lower interest rate that they could easily afford. But, the economy crashed, prices dropped and it left these people with high payments they really couldn’t afford all in the name of the American dream of home ownership.
So, today, underwriters are being extra cautious because alot of banks are holding the underwriters and the banks that approved the loans accountable. If they can’t sell the loan, the bank loses the ability to give another loan to someone else and make more profit for them.
So, if you are a buyer and you feel you are being picked on by the underwriter every chance they get, don’t feel bad you are not alone. The good news is today’s loans are a lot stronger and less likely to default and because of that, the home you are buying will have a better chance of keeping its value rather than being tomorrow’s foreclosure.
Comments(9)