The media ---- 
---- you got to love them... they can give you more exposure than you can handle. They can also create so much negetive hype they can single handedly destroy an industry. Simply being in the mortgage industry is a fight of it's own, let alone the momentum a media frenzy can deliver. According to the press, banks are not lending money.
Let me tell you something. Banks are lending money! Our company sells off our mortgage paper to banks. Banks are approving loans. Banks are honoring rate lock commitments and banks are closing loans through wholesale and retail channels every sngle day.
FHA loans have NO minimum credit score. Of course actual "credit" comes into play but Delegated Underwriters (DE) look at the whole picture. Was there and isolated incident that made credit go bad? Was it good before? Are there alternative forms of credit we can use? Are there any compensating factors? Does this loan benefit the borrower?
Let's say a couple in their 50's have had excellent credit until last year. The husband had a heart attack and was without a regular paycheck for nine months before returning to work. They went late and even bad on some bills. Since the husband returned to work ten months ago, all bills have been paid on time. The couple's credit scores are in the low to mid 500's. Listen up loud people - with compensating factors and a benefit to the borrower - this loan gets approved!
Understanding that the example above get's approved with a well put together loan package and a manual underwrite, how hard do you think it is to get a 600+ borrower approved for say 95% cash out? It is very easy.... Mortgage bankers are approving loans every single day. The problem is with the volume of applications. They have come to a screeching halt. The media has hyped consumers into thinking that nobody is being approved for mortgages anymore. This cannot be further from the truth. If we are going to pull out of this economic funk we are in, lending must increase. It keeps industries in business. It creates more cash. It pays off loans and credit card debt. It may be what will save the economy.
Mortgage Expert
Comments(5)