Imagine this. You've toiled and traveled months, years even, and you feel as if you have come to the end of your rope. You look to the heavens in outright desperation, and then the clouds part, and it appears. The Holy Sale. Angels sing.
It seems like that is the tale of every mortgage consultant these days. We are working so hard to get things done. Transactions aren't just a stroll through the countryside, they are brutal journeys through the most treacherous landscape known to man. Underwriting.
We are now in the world of appraisal reviews, guideline changes, rising credit score requirements, and bailing MI companies. Depsite best efforts by President Obama, Congress, the Treasury, and the Fed, it's still a small miracle to get a purchase loan closed. But to solve our lopsided housing supply/demand curve, we need to get more buyers qualified to buy. To do that, we need to do a couple of things:
1. Confidence. You can't legislate fear out of people. We need a concerted effort by lawmakers, the media, and the real estate community to bring back the love for loans. When we start hearing the word "bottom", we are well on our way.
2. Credit. A lot of folks are in a serious liquidity crunch. Just last week, my credit card company cut my limit and raised my rate. Just plain evil. With less money, things start getting paid late. Mortgages stop getting paid. With the avalanche of short sales, foreclosures, and loan mods, people with great jobs and plenty of assets can't get a loan. These are the very people we need in the market as buyers. By year's end, we will see some type of sweeping credit legislation that somehow allows borrowers to wipe the slate clean on late mortgages and accounts with qualifying hardships. If this happens, we could see sales back in the black.
3. Common Sense. Right now, lenders are just plain dumb. If they'd work with people who are late on their mortgages, we'd have less people trying to short sale. Less people walking away. This would normalize property values and you wouldn't have a neighborhood of comparable sales that seem to be dropping lower by the nanosecond. And on the lending side of things, MI companies and lenders are trying to drink sushi through a straw. Stop this nonsense with declining markets. If there were any time to take a risk on using a house as collateral to lend, now is the time. There just isn't much more room on the downside. Bring back some reasonable guidelines and the sales will follow.
There are no easy answers, but the Knights of the Closing Table could use a little assistance. I see brighter visions ahead, so let's continue to pursue the Holy Sale!