Zillow argument

Good for you, stick to your guns! I think having someone who cares enough to paint the whole picture for their clients should be commended! Just keeping doing what YOU do and being YOU! You will be ahead in the end for doing the right thing and you will be able to sleep at night! If everyone did business like that, maybe we wouldn't be where we are as a nation?!?!?

 

Right on! I thought the irresponsible lending days were over! I can't believe a loan could qualify with downpayment assistance AND first-time buyers assistance in this day and age. Cash reserves, and the proven ability to acquire them on a consistent basis is a crucial point in qualifying....or should be.

I agree with you on this stance. If they don't qualify for the loan, then they shouldn't be put into something they cannot afford.

Jennifer, you are of course right.  But you can only do so much for borrowers and still make a living.  I believe that if they qualify for a program without any funny business, it's probably best to keep personal observation to one's self.  Of course, any topic should be open on ActiveRain and noone should get flamed for a contrary opinion.

I've no issues with someone going FHA with seller assist up to 6% or 3% seller assist and 3% downpayment gift. They may need what capital they have left to move, buy draperies/furniture, keep money in the bank as a cushion, and so on. Many first-time home buyers need that little bit of assistance to get into a home they can call their own!

So, I look at the overall picture and ask a lot of questions. What are they paying per month in rent now? Will they be paying less per month with a mortgage? If they will be paying more, how much more? How's the prospect for promotion and/or increased income (although not considered in u/w)? Do they qualify? How comfortable are they with the payments? Is within their budget? Often times, I find that they want a payment that is much less than what they actually qualify for. They realize that they have other obligations, and still want to enjoy life as well. To me, this is someone who understands and knows that this is a serious obligation, and that s/he doesn't want to get in over his or her head,

Once, I had a borrower make a change on his W4 to bring home more per month after taxes to help with their overall budget. He had a "1" for claiming himself, but "0" for wife, child and home. By changing it to "4" (again, keeping it reasonable), the increase in take home pay was more than enough for him to go ahead with the purchase of a home, because he was now well within a comfortable budget he set for himself. He also needed seller assist to get into the home.

The problem isn't with FHA mortgages or downpayment assistance per se. It's the subprime borrowers who took out 2/28s and 3/27s and hoping to refinance BEFORE their interest rates go up. Meanwhile, property values declined in many areas, and most of them are upside on their mortgage, so they are NOT in a position to either refinance or to pay the higher mortgage payments when their notes adjust after the fixed period.

Let's be careful of the great pendulum swings.  While business as usual is not in the best interest of all consumers, becoming people's de facto parents is not the solution either.  Not all people who did 100% financing ended up defaulting, not even the majority.  To not have  controls invites the usual crooks and con men who manipulate the system (liar loans, loan fraud, etc.).  While having too much control penalizes the majority to prevent the scum.  Personally, I don't believe real estate agents should write loans.  I think there is an inherent conflict (I apologize to those who do it right), but barring that is not going to solve the problems.  There needs to be a way of ensuring that consumers are educated about their transaction.  Many of the defaults in this area are with non-English speaking individuals.  How do we help them short of deciding whether they can or can't afford a home? We can argue about what caused our current economic situation, let's figure out a solution that is long-term rather than panic.

Hey Jennifer~The more we inform our clients, the better informed they are ! As to having a crystal ball and predicting to head off the Mortgage mess with lots of disclosure...well... it's anyones guess.

Good post, Jennifer..I always tell my buyer clients that they not only need to find out how much they CAN afford to borrow, but more importantly, how much they are COMFORTABLE borrowing.  It is best to know this before looking and falling in love with a home.

I think FHA is kicking back some of these marginal cases now.  I do miracles from time to time, but if it's really not a good loan it will find a way to fall apart somehow.  If the ratios are high and the reserves are zero, but the credit score is 700+, something is going on that we can't see.  How can one live hand to mouth and consistently pay everything on time over and over.

Answer: Ebay, side jobs, hobby income, babysitting . . . The point is that some people are going to "GET'R Done regardless of the numbers we can prove.  FHA will pick up on this and approve marginal cases based on the track record and not a dollar more.

I think our sub-prime mess had a lot to do with these 1% teaser rates everyone was hawking and the AE niche programs that were floating around.  "One Day out of BK"  "600 I/O No Doc Investor" 

I have been really looked down on from Realtors for balking at a FHA manual underwrite too.  Sure there is a slight chance it may get approved so work may butt off and try to get paid, right?  I don't know.  If in my experience it has a reasonable chance, I'll work on it, but only if it makes sense to me.  This way I can argue the case before the underwriter and probably win.

What most Realtors fail to understand is that the lenders that fund loans for us and then default are held against us.  If our failure rate is too high with a lender, the lender will cut us loose.  Lose a few lenders and it's doomsday because future lenders ask on their applications, "Have you ever been cut-off from any lender?"  Mark "YES" here and you're probably done.  It' hard to close loans without the money!

I think your opinion is fine and it is your opinion, I don't know why people get so upset at someone else's opinion. Snide remarks are never needed in any forum, I will speak from my vantage point. I've had clients that have easily had the money in a 401K that they could have used, but would rather roll it in to the loan. Once client had $200,000 in a 401K and did and FHA with no money down and we raised the price 3% to cover the closing costs.

I believe each persons situation is different, but I agree that if a person has $20 in the bank and no other source of income, then maybe we should consider not giving them a loan for $400,000 with no money down, no matter how much they make.

Food for thought ~ I do believe that we have an obligation to provide our clients with all the information and let them make the final decision.   Financing can become such a maze for our clients to understand and the more information about how payments will affect their life moving forward and what they can do to protect the BIGGEST INVESTMENT they will make, I believe is and should be part of what we provide as a service.  Bottom line once you've educated your client, the decision is theirs.  Great Post ~ Thanks