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My conscience...

By Kevin Hoover

Mortgage and Lending with OneTrust Home Loans NMLS # 458561

June 11, 2010 07:33 AM

Just need to get this off my chest.

Currently been working with several very marginal buyers who, by the skin of their teeth, qualify for a mortgage. Very low FICO scores, high debt to income ratios, very low reserves, but really want the house. Some have other good compensating factors like a non-qualifying spouse with income that will live in the property but will not be on the loan. That helps some, but... geez!

If this were my personal money, I'd never lend it to these borrowers. However, this is not my personal money; these are government secured notes and will get approved. I am very concerned that we are setting up these borrowers for failure if (God forbid) they lose a job or get sick, or a multitude of other factors.

Hate to say this, but... I wish we were tougher on our marginal buyers. Why are the Debt to Income ratios 55% (or higher!) for these types of borrowers? OK, now it's off my conscience!

Note: this is my personal opinion and does NOT reflect the attitudes or policies of my employer.

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Darren Revell

Keller Williams Realty Temecula Valley - Temecula, CA

Ouch... I thought things in the States were tightening. The system here in Canada seems to be a little more stringent. I posted a blog a few hours ago that I learned yesterday that 93% of all Canadians had never missed a mortgage payment. I think that the difference is in the affordability factor. TDR of 42% is pretty normal here...

Thank you for clearing your conscience and letting us all know what is still going on...

Jun 11, 2010 07:38 AM

Kevin Hoover

OneTrust Home Loans - Albuquerque, NM

They have been most certainly been tightening guidelines if you are getting a 'Conventional' loan, meaning non-government. I've got another borrower who is putting 10% down on a much more expensive home ($400K) has plenty of cash in the bank, excellent credit, but his DTI is 47.0%. For this loan, I'm capped at 45% DTI when acquiring conventional mortgage insurance. Not 45.1%; 45.0% and lower. He would qualify for the actual mortgage at his higher DTI of 47.0%; I just can't qualify him for mortgage insurance with that higher DTI.

Because he's needs more than the FHA loan size limit, ($271,050 here in Albuquerque) I have to use a conventional loan product. Crazy world....

Jun 11, 2010 07:54 AM

Don MacLean

New England Real Estate Center Inc. - Easton, MA

Realtor-Homes for Sale- Easton, Mass 02356

Marginal buyers need homes also.

Maybe the tightening of the belt will help.

My grandmother told me she borrowed $ 5.oo to get my mother out of the hospital way back when.

maybe a bit over board but the point is the same, we all borrow money at one time or another.

Enjoy the day

Jun 11, 2010 08:06 AM

Jody Lautenbach

Century 21 Premier Associates - Pella, IA

I'm with you - if we were tougher - many of those that have been foreclosed on would not be where they are today. Buying a house is something that you should save for and think about. The more money the better. . . . but who are we . . just the realtor.

Jun 11, 2010 08:08 AM

Kelly Krauth

Network Funding LP - Tijeras, NM

NMLS#246197

Yeah and on the opposite side.. you get folks with 800 FICOS. and secure jobs, good income,low debt, and they still make them jump through hoops!

Nov 06, 2010 02:07 AM

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