A frustrated borrower

By
Mortgage and Lending with Fairway Independent Mortgage, LLS. Equal Housing Opportunity. Regulated by the Division of Real Estate. LMB100023827. NMLS257576.

Today I was working with one of my loan officers on a file ... an extremely qualified borrower I might add that was getting quite frustrated with having to document his income and identify his deposits in his bank account. Here was my response back to the loan officer:

"I know it is tough to ask a buyer as qualified as Mr.XXXX for all this documentation. Unfortunately, it's the world we live in today. Investors don't care about common sense, and for some reason the risk factor seems to have been completely eliminated for the time being. The crack down by the Federal Reserve has forced investors into a CYA mentality (don't mean to be crude, but it seems to be the best way to describe it.)

All move up and relocation buyers are going through the shock of what is being asked of them, because "the last time" they didn't have all these hoops to jump through. And they didn't. And WE didn't have to ask them to jump in those days either. Our industry as a whole has been put in a sort of "time out" being punished for the stupidity of following our instructions a decade or so ago, when the government's call to action for our industry was "every American DESERVES a home" (started during the Clinton administration, actually). Thus came stated income and then stated income, stated asset loans along with 125% LTV loans, and let's not bring up those self-destructing option ARMS! Doing these high risk loans, resulted in high returns for those lenders and investors... but not for long. And even though WRSM did not participate or fund those types of loans, we are not exempt from the national punishment which is bestowed on not only the lender, but our buyers as well.

Is it ugly? ABSOLUTELY! And I hate it, too. But there's nothing we can do about it right now. And to wonder if it's going to get worse is a concern I hope we all have. But that's another discussion. For right now, our buyers just need to know: THIS IS NOT ABOUT THEM and to try and not take this personally. And to be honest, I have to wonder if this is part of the "big plan": make it difficult; make us all become so frustrated, that government run housing is welcomed as another change in our nation.

So, do I feel for what Mr. XXXX is going through? Most definitely. But it's not too far fetched to be concerned that a day may come in the not too distant future that wanna-be buyers won't even have the option to jump through all these hoops.

Now that I've completely depressed myself, I'm going to go and pull those never ending weeds that like to invade my flower gardens, except today I'm going to be thankful that I have a house and a yard of my own to worry about. And hope and pray my grandkids do, too."

I seldom, if ever, write any blogs having to do with a political edge to them. But right now, I'm frightened. We ALL need to be!

Posted by

Opinions expressed here are the sole responsibility of the author, and do not necessarily reflect the view of Fairway Independent Mortgage.

Ruth Vogt Colorado Mortgage Lender Ruth Vogt, Sales Manager

 #LMB100023827, NMLSR# 257576

 Equal Housing Opportunity. 

 Regulated by the Division of Real Estate.

   www.ColoradoHomeLender.com

   ruthv@fairwaymc.com  303-881-7849.

 

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Comments (41)

John Cunningham
eXp Realty - Phoenix, AZ
Helping Phoenix Sellers and Buyers find each other

Ruth,

Isn't it amazing that EVERY deal is a struggle now. It can be exhausting for the professionals working on the transaction and simultaneously an emotional roller coaster for the  borrower and the seller. As many have said here today, people need to count their lucky stars to have rates such as this.

Jun 29, 2010 05:43 PM
Denise Adame
AZ & Associates Real Estate Group - Phoenix, AZ
Hablo Español

I agree with post #22, the lenders aren't being careful, they are being ridiculous.   Common Sense has completely gone out the window for some UW's.  Every transaction involving financing is pretty close to a 'bad dream'.  It's almost like the lenders don't want to lend and are just looking for an excuse to reject a loan.  But unless we can fill our pipeline with CASH only buyers or decide to 'switch careers' we and our clients will continue to be at their mercy, unfortunately.

Jun 29, 2010 07:37 PM
Tom Ramsey
Century 21 Northland - Traverse City, MI

Hi Ruth thanks for sharing this.  I to have had similar situations happen to me recently.  I have buyers who just can't understand why they must have this document or provide this.  But in the end it is worth it - especially with these low interest rates!

t

Jun 29, 2010 07:37 PM
Rodney Mason
Guaranteed Rate NMLS# 2611 - Atlanta, GA
VP of Mortgage Lending - AL, FL, GA, SC, & TN

Most people really still do not understand how much the lending guidelines have tightened in the last 3 years.  Lenders are having to absorb losses left and right.  It's easy for someone to say they are great borrowers, just approve them. 

Of those complaining about the tightened guidelines, how many would take the same stance if they were actually lending their own money????  Would they lend justanyone their money without similar verifications, I doubt it. 

Jun 30, 2010 02:36 AM
Brent Wells
The LivingWell Team - Prosper, TX
Real Estate Broker serving all of North DFW

I completely agree! When we have very financially well healed clients, its a bit frustrating watching them have to jump through the hoops. Luckily most of them are familiar with how financial institutions work and they just roll with it.

Jun 30, 2010 02:38 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Ruth: Thanks for this. I appreciate it. We are being challenged like never before. Only the strong-minded will survive. I wish you well!

Jun 30, 2010 02:54 AM
Stephanie Stringer
First Choice Loan Services NMLS#210764 - San Antonio, TX
Mortgage Loan Originator

Rodney (#26)--- I think the first time home buyers are a lot more understanding than the second time home buyers just because the first really don't know or have not gone through the process before like our second timers.  Well at least they thought!!!I get a lot of comments in today's lending crises that we did not have to give all this documentation on the first house we bought.  Of course I have to go through my spill about the changes in lending the last three years.  Sometimes, will a client goes overboard about the documentation then, yes Rodney I turn the tables and ask if they were lending $200K would they want some type of back ground check (income and assets).  I only had to bring that point up a few times, which I hate too but it is so TRUE, plus these past homeowners that give me the most flack went on the no income no assets the first time around.

Jun 30, 2010 03:02 AM
Anonymous
Russ

If any of you were walking down a street and a guy you didn't know came up to you and asked you for $500k, would you give it to them?  Only if they could show beyond a doubt that you would get your money back.  Until you put YOUR OWN MONEY on the line, it is hard to understand why banks act the way they do, especially after taking the huge losses on all those "common sense loans" that were done during the bubble.

The other thing consumers and Realtors don't understand is that banks make loans because they are salable.  This means unless the loan is documented a certain way, NO MATTER HOW STUPID IT MAY SEEM, that loan is essentially worthless to the bank.  The secondary market is so efficient and so large that investors do not have time to know the back story regarding every single deal.  Therefore, it boils down to fitting the loans in a box.  

The other issue is FRAUD detection.  When you are lending out billions of dollars, you better bet there is a lot of fraud.   The amount of money involved in real estate, plus the overall lack of any real barriers to entry for Realtors and LOs, combined with consumer desperation leads to a ton of mortgage fraud.  U/W ask to document deposits, verify employment, and all these things because that is how fraud is uncovered.

Yeah, banks can be stupid sometimes, but always remember, you are borrowing hundreds of thousands of dollars, not asking for a monthly payment plan on a TV at best buy.

Jun 30, 2010 03:44 AM
#30
non non
Frisco, TX

Thanks for sharing this insight. Most people have a hard time understanding..I always try to set realistic expectations when I take a loan application of issues that may come up and explain that the mortgage lending world is much different that 5 years ago.

Jun 30, 2010 04:15 AM
Jim Enright
Corporate Investors Mortgage Group, Inc. - Chapel Hill, NC
Mortgage Strategist - Mortgage Rates - Raleigh

Hi Ruth -  as a lender in Chapel Hill, NC, I'm as flustered with the underwriting as any borrower or agent could be.

-Over documentation is necessary at application.
-Compliance with RESPA is constant.
-Quality Control is ongoing....especially once the loan has been approved, and is in the closing department.

So it's: over document at application.
Prepare borrowers for the unexpected and that it's not (necessarily) them, though it could be.
Keep the agents in the loop.
Expect the best....prepare for the unexpected.

Thanks for you post.

 

Jun 30, 2010 04:22 AM
Ruth Vogt
Fairway Independent Mortgage, LLS. Equal Housing Opportunity. Regulated by the Division of Real Estate. - Colorado Springs, CO
719-592-0855 Apply 24/7 www.ColoradoHomeLender.com

Carole, Sometimes you run into buyers that don't care how much you advise them... they just want to complain. But, this case was different. He wasn't angry, just frustrated with the extra documentation he had to provide this time. And he was right.

Amanda, As they should be!

Karen, I love it! and I'm going to "adopt" your saying and share with my other real estate agents!

Lew, And most don't look good in orange and/or the stripes are going the wrong way to be flattering! ha!

Ginevra, thanks for the comment and I'm glad I could share something of value with you.

Jun 30, 2010 01:54 PM
Ruth Vogt
Fairway Independent Mortgage, LLS. Equal Housing Opportunity. Regulated by the Division of Real Estate. - Colorado Springs, CO
719-592-0855 Apply 24/7 www.ColoradoHomeLender.com

Joe, I suspect it's not going to return to any state of "normal" for some time to come.  :(

Donna, nothing is easy anymore, is it?

Bryant, it almost seems that the well qualified these days are the ones that get scrutinized even more???

Nancy, you are right! Not only "in stride" but appreciative and even follow the instructions better!

Rob, good perspective. thanks for bringing that up.

Jun 30, 2010 01:57 PM
Ruth Vogt
Fairway Independent Mortgage, LLS. Equal Housing Opportunity. Regulated by the Division of Real Estate. - Colorado Springs, CO
719-592-0855 Apply 24/7 www.ColoradoHomeLender.com

Ruthmarie, I can't begin to make reasonable excuses for any of your situations. I hate it, too!

John, It does seem that EVERY deal is a struggle. But that's probably why we love it!   ;)

Denise, Just try not to shoot the messenger.

Tom, Yes, let's hope the day will come when the pain is forgotten, and the payment is appreciated!

Rodney, Quite true.

Jun 30, 2010 02:04 PM
Ruth Vogt
Fairway Independent Mortgage, LLS. Equal Housing Opportunity. Regulated by the Division of Real Estate. - Colorado Springs, CO
719-592-0855 Apply 24/7 www.ColoradoHomeLender.com

Brent, Yes, most do. It's just once in awhile....

Paul, thanks for stopping by and leaving your kind words.

Stephanie, I agree. Once a buyer has experienced the No Income financing program, it's almost impossible to shift their thinking to what's going on today.

Russ, Thanks for chiming in. I bet I've seen more fraud attempts today than ever before. Why? Probably those were the past "No Income" borrowers. And the fact that our buyer was putting $600k down on an $800k home sounds good upfront... but there are still (believe it or not!) lenders doing 125% 2nds! So now where is the collateral? Prudent lending is what we must strive for (and support!)

Chris, A lot of loan officers from "yester-year" also have a hard time readjusting. 

Jun 30, 2010 02:11 PM
Ruth Vogt
Fairway Independent Mortgage, LLS. Equal Housing Opportunity. Regulated by the Division of Real Estate. - Colorado Springs, CO
719-592-0855 Apply 24/7 www.ColoradoHomeLender.com

Jim, great comments. OH... and don't forget the "over disclose" part!   :)

Jun 30, 2010 02:13 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

It has become ridiculously difficult to get loans for so many people.  I understand lending was lax, but the pendulum has taken a serious swing to the other side.

Jun 30, 2010 06:57 PM
Debbie Walsh
Shahar Management - Middletown, NY
Hudson Valley NY Real Estate 845.283-3036

Ruth congrats on the feature!  Very good post!

Jul 01, 2010 02:46 PM
Don Spera
CR Property Group, LLC - East York, PA
Serving York and Adams County, PA

I personally have major issues as well with the government.  As long as their are two aisles, left or right, conservative or not, our country is going to hell in a hand basket.  I pity our future generations.

Jul 06, 2010 01:58 AM
Ruth Vogt
Fairway Independent Mortgage, LLS. Equal Housing Opportunity. Regulated by the Division of Real Estate. - Colorado Springs, CO
719-592-0855 Apply 24/7 www.ColoradoHomeLender.com

Christine, As lenders, we agree. But we just follow the guidelines given by the investors.   :(

Debra, Thanks so much. And thanks for stopping by!

Don, Let's hope it doesn't end up as bad as we fear.

Jul 06, 2010 05:40 PM
Jason M. Keith
Caliber Home Loans - Parker, CO
Equal Housing Lender

It's tough out there, and Thank you Ruth for always being there to help get things done!  I keep thinking that pendulum is going to start swinging in the other direction and hear things like "It will get better in another year..."  That still seems to be the saying for the last couple years.  Well,  "It will get BETTER in another year!"

Views and opinions expressed on this site are not necessarily those of WR Starkey Mortgage.

Jul 19, 2010 04:18 AM

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