The mortgage mess and the lack of common sense.

By
Real Estate Agent with Rossman Realty Group 703456

We all know that in the past, buyers only had to make a phone call to get a mortgage. Those past years showed that almost anyone could get financing without any credit, or with zero down, or even with no job if a 10% or 15% down payement was on the closing table.

Today, it seems that it's exactly the opposite.

I made a few stats about buyers and sellers so far and saw that 87% of my pre-approved buyers have been denied. That was huge enough for me to put my number on paper.

My last 3 buyers had a lot in common:

    * They were all employed at their same position for more than 2 years.
    * They all had their last 2 years of tax returns.
    * Their FICO score were all in their low to mid 700.
    * They were all tenants and had a down payment.
    * They all made an offer on a property priced below $100K.

However, they have been denied by their respective lenders, all different, for different reasons.

What's strange to see is that those buyers are paying their rent, month after month, religously, sometimes a higher amount than their mortage payment, but still are seen as a risk by those lenders.

The sub-prime put the mortgage field in a big mess that we know today. The lack of common sense may put it in an even worse situation...

Posted by

Claude Thomas, Realtor®

1104 SE 46th Lane

Cape Coral, Fl 33904

(239) 240-3283

Cape Coral Real Estate

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Rainmaker
1,086,700
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

The pendulum has swung too far in the other direction . . . The banks need to get some common sense and make loans to qualified buyers.  It'll certainly help housing.

Jun 06, 2010 12:36 PM #1
Rainmaker
2,800,091
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Claude, It seems like you may not have all the facts. What were the reasons ... were ratios off?

Jun 06, 2010 12:38 PM #2
Rainer
143,635
Alice Broadway
Parker & Rankin (Ms) & Azalea Realty (AL) - Mobile, AL
Real Estate Broker

Claude, I agree, the mortgage companies in LA, thats (Lower Alabama) in case you thought I meant Los Angeles. lol. I cant seem to find a mortgage representative I can work with.

 

Alice Broadway

RE/MAX Today  Grand Bay Al.

 

Jun 06, 2010 12:42 PM #3
Rainmaker
112,753
Claude THOMAS
Rossman Realty Group - Cape Coral, FL

Kathleen,

The ratios were not off except in one case where it was 43%, and yet, that lender said he could work with that, before denying the loan few weeks later...

Anoither reason was the buyer's relocation to another branch of his company. The lender ruled that the relocation was part of a re-structuration of that same company because that company was in financial trouble, making the buyer is a weak laboral position...In short, chances exist that he can be fired as well...

Jun 07, 2010 12:31 AM #4
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Rainmaker
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Claude THOMAS

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