An Insider's View

By
Real Estate Broker/Owner with Wagner Real Estate Group

Fovernight. Fear is paralyzing, and the news reports create fear and worry. Actually, it is an excellent time to buy a home, with prices not seen since 2004, and despite what some would have you believe, mortgage money is readily available. That said, things have changed drastically since this time last year when it comes to loan products, and what it takes to qualify.

What everyone needs to know about mortgage money is that the sound lending practices, that should have always been in place, are back. In fact, the pendulum has swung to far the other way, but that will correct itself, given time. Unfortunately, a lot of bad loans were made, resulting in large losses to lenders and investors. Remember, every loan is an investment for a mortgage company, bank, an investment fund, or a foreign investor. When too many of these loans turned out to be bad investments, investors stopped buying them. That put all the lending power back in the hands of Fannie Mae, Freddie Mac, the FHA (Federal Housing Administration) and the VA (Veterans Administration). Thank god we have these government sponsored agencies. These agencies have the power to keep sufficient liquidity in the housing market, to avoid a full scale crash, but only if the loans we make today are good investments that provide the returns the investors expect.

These government agencies are now providing over 8-% of all residential mortgage money. That means they get to make the rules. Superior Mortgage has been originating loans for 21 years, and we have the knowledge to continue to make plenty of loans under the current rules. To help us accomplish this, we need our Realtor partners and our customers to understand the work that needs to be done on every loan.

Income needs to be documented in almost all cases. Appraisals need to be done right, with recent comparables that are really comparable.  Credit needs to be better than allowed before the August 2007 melt down. When credit is not acceptable, Superior has developed a special program to assist borrowers to raise their credit scores, so we can turn them into buyers for you in the future.

Assets for down payments need to be properly verified, so the lender can be assured the buyer will have a financial stake in the property. Clear evidence exists to prove that borrowers with no skin in the game are much more likely to walk away from a property verified, so the leader can be assured the buyer will have a financial stake in the property. Clear evidence exists to prove that borrowers with no skin in the game are much more likely to walk away from a property when things get tough, than a borrower who used their own savings as a down payment. In addition, underwriters need to take the time to review every detail closely, and make sure all the documentation is sound, and supports the approval decision.

Although Superior has always been totally committed to giving fast service, and being on time to meet every commitment and closing date, this extra attention to detail can make the process one or two days longer. The process also requires everyone's cooperation. We think this is a small price to pay to help restore the confidence in the mortgage industry that we all need, in order to achieve long term price stability and success in our chosen industry.

We look forward to helping you and your customers be successful in the current challenging market, and the great market that is sure to follow.

Comments (10)

Anoir Redouane
Halstead Property, LLC - Manhattan, NY

Dear MaryAnn,

Just wanted to welcome you the AR, best of luck and please visit my blog from time to time and any comment is appreciated. I love your article by the way and fully support your view. It's a GREAT time to buy.

Best regards,

Anoir

 
 
Your Hoboken Property Expert...........Experience you can bank on!
___________________________________________________________________________________________________________________________________________________________
 
Perez Redouane Property Partners
Anoir Redouane, Realtor
 
Robert De Ruggiero Inc., Realtors
89 Washington St
Hoboken, NJ 07030
201.222.7550 ext. 12
Jul 12, 2008 08:10 AM
Stefan Geyer
SOA Realty - Aurora, CO

That is a long first blog > congrats on your first post and welcome to Active Rain!

Jul 12, 2008 09:13 AM
Greg Steffens
Mountain Country Realty - Lake Arrowhead, CA

Hi Mary Ann - Welcome to Active Rain and congrats on your first post.  Be sure to spend some time looking around at how and what others are blogging here.  It is a great education and lots of fun.  Looks like you're off to a great start...keep it up!

Jul 12, 2008 10:23 AM
The Trumm Team Omaha Homes for Sale, Real Estate
Keller Williams Greater Omaha - Omaha, NE

Welcome to ActiveRain!

If you would like a few tips on getting the most out of ActiveRain, please visit my blog Welcome to Active Rain.  It has a few simple steps of what to do now that you have joined.

If you ever have any questions, just let me know.

Troy Trumm

Jul 12, 2008 11:03 AM
Robert Huntsinger
Empire Realty - Upland, CA
Empire Realty Upland, CA - Full Service at a Discount

Welcome to AR!

Your right about the points you wrote about, I just hope that Freddie and Fannie make it out in their same form.

Take care!

rjh

Jul 12, 2008 11:10 AM
Bill Kennedy
Keller Williams Greenville Upstate - Greenville, SC
Homes For Sale Greenville SC

I saw your new blog and I wanted to welcome you to Active Rain! This is a great community for learning as well as sharing. Check out some blogs, join some groups, and write on all types of topics - not just real estate!  I've received a LOT of business in a short time (I started August 2007) that can be tracked solely to my blog... so keep at it and results will come!

I look forward to reading some of your future posts!

Jul 12, 2008 01:11 PM
Keith Elliott Jr
KEIRE Realty Group - Manassas, VA
Principal Broker/Owner

Hello MaryAnn,

Welcome to Active Rain and congrats on your first post! The opportunities to learn and network are incredible here. Best of luck to ya!

-Keith

Jul 12, 2008 02:19 PM
Susan McQuaide
Keller Williams - Simpsonville, SC

Welcome to Active Rain! I am sure you will find this site both helpful and fun!

Jul 13, 2008 10:05 AM
Josephine Olson
Keller Williams Realty - Piedmont, SC

Welcome to Active Rain! I hope you are enjoying it. I look forward to seeing you around!

Jul 13, 2008 02:06 PM
Connie Rice
Keller Williams Greenville Central - Simpsonville, SC
Connie Rice & Partners - Greenville, SC Real Estat

Welcome!! Youve joined a great place to meet new people and get some good tips and advice. Be sure to call on me if I can ever help and welcome again! Enjoy

Jul 13, 2008 02:18 PM