NAR is Right – GSE’s are Wrong
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May 31, 2013
June 5-6, 2013
Common sense is only common sense if you agree with it!
Common Sense, where have you gone?
And NAR isn’t footing the bill either…sorry, I’m sorry, I’m very sorry. I’m not sorry
I know people with a 750 credit score that only work part time at odd jobs. They make less than $20,000 per year with no steady job history and don’t live at the same address (or sometimes the same state or country) for more than 6 months at a time.
Credit is only part of the underwriting guidelines.
It’s that whole idea of the underwriting pendulum! I spoke with a past borrower this week who every few years will get a loan on his free & clear primary residence to buy a commercial property and then he’ll pay it off in a couple years. He wanted to know if he could have a no doc, $750k cash out, interest only loan… like last time he refi’d in 2005. After I stopped laughing, I explained to him that things are kind of different now. =)
It is the Investors who are driving the bus. They want perfect files that are defensible in case the borrower sues.
Investors have people on staff who’s job it is to look for any kind of discrepency, error or omission so they can decline to purchase the loan.
Underwriters are scared because if they have a few loans rejected, they can lose their jobs.
It’s the guys with the gold that are making the rules.
“Investors have people on staff WHOSE job it is to look for . . . .”
LOVE YOU GUYS
Amen. I am working with a couple today with 20% down, wife has 800 score, but husband has no score at all. They have 3 plus years rental payment checks etc. Can’t find an investor who will do it. Plain stupid.
Its probably easier to get him a score than to find a lender for it without a score.
It seems to me that everyone wants to point the finger. The fact is that bad guidelines did cause a mess for our industry, and yes current underwriting standards are a little overboard right now, but mostly with petty little things. If your loans are getting delayed because of underwriting then you are working for the wrong team or company. My Underwriters are only asking me to do upfront those things that come back after closing to take care of. I have petty indifferences with underwriting and have to chase conditions that I just don’t see as necessary….but I never miss a close date because of it. I do my job up front and review every paystub, every bank statement, absolutely everything that I put in the file before I turn it over….I do it all up front and anticipate what will be asked for. My company promises me that I will never miss a purchase close date because of underwriting, and thus far (over 4 years) I never have because of something to do with underwriting. If you are not happy with the flow where you are at then change.
Correct! Quit whining about the negative things and just sell what you have available for now. The market will eventually ease up and underwriting standards will eventually follow.
Ditto!
first credit score is not comparable over a ten year period, the credit scoring models have changed over that period of time, comparing apples and tomatos! TBWS, You guys are talking about common sense standards. let see what is classified as common sense. common sense to me, DTI never exceeds 38%, every file must be underwritten by a person and elimate AUS programs, down payment of 10%-20%, all first time buyers are required to have 15y fixed rate loan. however, this is not good for NAR and it’s agents, so you will never see it mentioned. what is good for NAR is not good the people! if Stated/Stated to 540 score was back, would NAR say “lets not sale that unit to that buyer”…I think not…corupt from top to bottom!
missed two important common sense, elimnate recent 90 day comps in asset vauluation (30 year loan but asset value over 90 days?, WTF), formal budget required on all loans inculding family size and child care cost, imular to VA.
“elimnate(sic) recent 90 day comps in asset vauluation(sic) (30 year loan but asset value over 90 days?, WTF)” Did you mean don’t use comps over 90 days or did you mean less than 90 days? Why not in either case? They are now adjusted up or down for time to take care of that problem. And what does the present day value have to do with a 30 year loan? No one knows the value of the property in 5, 10, 20, 30 years. The loan is made as of today and everyone takes their chances.
Using comps closed within 90 days allow bubbles to form rapidly. time adjustments, ha, ha…yeah those help. I feel each appraisal should contain longer history of comps, 20y, 15y, 10y, 5y, and going market. that would allow buyers and risk takers a chance to address risk of inflated values/bubbles. also, shut-up the darn “best time to buy realtor”. Asset value, you say no one knows the asset value in “x” amount of years. If your money was on the line, you would want to have a really good idea and closed comps within 90 days does not show true value. most buyers do more back ground on thier fantasy football. like i said, this is just part of it, underwriters are questioning a 100$ deposit into an account, meanwhile the home is overvalued, dti is out of scope, and the UWer has zero idea of the household budget of the prospecting buyers….out side of VA, all loan program need to be revamped.
I really enjoyed this one. All so true. Like delaying a ctc because the cpl letter didn’t have my borrower’s middle initial. Thanks for the good laugh this morning. I needed that! First order of business….repeal Dodd – Frank. BTW, just looking at Barney Frank makes me wretch…..
I had an appraisal rejected because the borrowers name differed from the current recorded owners name( the borrowers name was missing a middle initial….
and quite rightly so, I just missed it when I was typing it up……wont do THAT again…
After 26 years, you should know what is requied by the guidelines. Another name on ANY bank account is, and always has been,a red flag that needs to be explained. If the address is incorrect on the Evidence of Insurance, why would you submit it? When the house burns down and the insurance company denies the claim, the borrower will have no success claiming ‘but the address was correct on the title policy’!! DO YOUR JOB and quit snivelling.
Roadking
Nice reply Roadking. Way to many people spouting off with reckless abandonment here. Bottom line is….if you want an easier approach to loans, go FHA. Prep your borrowers on the higher cost in advance and I’m sure they’ll love you for it. If my U/W asks for a stupid condition…I call them out, but if borrower has deposits outside normal payroll, well you better provide me a paper trail. It’s the nature of business today and you just adapt.
TBSW…quit prostituting yourselves and offer up substantive content. Who cares what the President of NAR has to say. Right now agents still get 3-6% while every loan officer across the country is experiencing restrictive compensation. Riddle me this batboys (I suspect I’ll hear it from a few agents) How many Realtor signatures were gathered in support of stopping frank-dodd (lower case for a reason), or how about HVCC? Truth is that for every 580 scored 100% I/O purchase loan ever originated, had a realtor attached who either didn’t want to know, didn’t care, or had a “get it down I don’t care what it takes or I’ll find another for my client attitude.”
Rant aside, I’m glad for the changes. We lost 50% of the short comers during the change. What we have left now are dedicated men and women who know how to read guidelines, prep their clients, set proper expectations, and sell the file…well 90% there appears to be a few stragglers posting here.
Everyone knows it’s harder to do loans today than it was in 2002. It’s also easier than 1995. You know your job you get it done. The only ones unaware of the changes are?? Okay…I won’t pick on them anymore.
Remember this— USDA is not just rural development. It’s we usda do this, we usda have this, or I usda do one loan and 20k. Well, usda aint got it anymore, and usda gotta know programs, and if usda did one loan now, usda should leave the business.
One more thing…for those on their high perches looking down on us mere mortals, while I appreciate the fact you never did a sub 600 credit score loan , 2/28 I/O or stated/NINA/NO Ratio/No Doc/NISA/Pick-A-Pay or 80/20 loan (lies, lies and more lies)You knew someone that did, and if you were dumb enough to pass on those…well I guess you’re not God’s at all. We all sold em and you did too. TBSW broadcasted them, had every subprime lender advertising them and not once did words of wisdom ring down upon the ears of its listeners chastising them for drinking the punch….
I liked this one: Three weeks after closing, the investor asked for a letter from the client stating his employer hadn’t changed. Not a VOE or VVOE, a letter from the borrower/buyer. Huh?
“It’s Europe, it’s the weather, it’s the Middle East…” those excuses sound familiar…who was it who used those a few months ago????
Any who, what gave you guys the impression that this administration wants to creat jobs? The slowness of Frank-Dodd rules? The slowness of healthcare rules? The lack of a budget for three years? Killing the pipeline? The moratorium on drilling in The Gulf? The lack of trade agreements? The upcoming fiscal cliff? The uncertainty over EPA’s rough draft carbon regs? The increases in rates via g-fees? The Fed pumping cash into a system now primed for runaway inflation? Just checking…..
Great comment! If only are politicians were half as smart as you!
But the point is correct. UW standards or condition requestsare so obsurd Ive never seen any thing like it in 26 years. A request for a will and testament to see that an x husband was on my clients bank statements solely for taking care of my clients dogs is a perfect example. Or Holding up a purchase closing for three days so that the word Ave. could be added to the address on my clients home owners insurance policy, when the title policy provided was perfectly correct.
I believe the days of NO score our country was far better off. ALlowing people to be based on a number was and always will be ludicrous. Used to underwrite when your job was on the line for too many mistakes. It is still to an extent but a loan officer(good one) was worth their weight in gold. ALlowing kids out of college to determine character and the ability to lend was a big mistake. THis comes solely from experience. The economy tells it all.
I have always said that, as the perfect borrower is the one paying the price for those horrible creative financing options that were available back in the day!
Rental income calculations have changed of late as well, and that puts fewer loans on the books. Pretty amazing difference in how US Bank calculates rental income vs. Fannie/FHA. I understand the need to show sufficient equity to convert a PR to a NOO, but there’s a significant difference in how the rental income is calculated now vs. years past.
Underwriters should be allowed to use common sense and not forced to wear blinders.They should be trained to think outside of the box and not feel that they will lose their jobs if they make mistakes.
p.s. GSE backed FNMA and FHLMC conventional mortgage,
(whether lates prior to short sale or not);
2 yr wait after short sale with 20% down 4 yr wait after short sale with 10% down Take a look at the credit of past short sellers: proof is there. They are employed.