Lenders Have no Intent to Loosen Credit

06/17/2016
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In a recent MBA survey it has come to light that 90% of lenders have no intent to loosen credit.  90% is a big number.  It seems they’ve been conditioned to write tighter business in an effort to reduce the chance of any fines.  Not to mention the fact that they are currently making record profits, so why would they change?

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  • Could you please turn down or turn off the music in the background of your videos? It distracts from what you are saying. Many times it is so loud I turn off the video completely. I appreciate your content and your humor but find the music extremely irritating.

    Carolyn June 17, 2016 7:55 am Reply
  • Pingback: Lenders Have no Intent to Loosen Credit – National Real Estate Post | Stevesisman's Blog

  • Guys, you seem to be buying into the prevailing narrative that mortgage underwriting standards are too high, and that (in the words of Realtor.com’s Chief Economist, Jonathan Smoke) getting a loan is “insanely difficult.” It’s just not true–and any loan originator today should be able to confirm that.

    MBA regularly publishes their analysis of credit availability in terms of average FICO scores for funded loans. As of last December, the average score was 754–rather high by most standards. Everyone infers that this indicates higher credit requirements on the part of lenders. This is fallacious reasoning. The higher scores could just as well be the result of more high-score borrowers applying–and fewer low-score people making the attempt.

    The problem with this pervasive narrative is that it becomes a classic “self-fulfilling prophesy.” People with lower scores–let’s say 620–don’t apply, since they believe they’ll get rejected.

    My experience as a working loan originator is that a conventional borrower with a 620 score and the ability to document income and assets will get a DU Approve/Eligible, and we’ll be able to fund that loan. True, they may have to pay off some collections and judgments, but they’ll get the loan. I can say the same about a 580 FICO FHA borrower.

    Various commentators and politicians have spoken in dire terms about a repeat of the 2008 crash–but they always neglect to acknowledge the REAL driver of the meltdown: the combination of 100% financing, little to no income and asset documentation and low credit scores–the proverbial Perfect Storm.

    How about doing some stories about the real world of getting approved for a mortgage, even for those imperfect borrowers?

    Joe Parsons June 18, 2016 8:39 am Reply

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