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.
You guys are unbelievable. You are so spot on most of the time and bring to light great subject matter. After watching you today, you would just drive us off the cliff, like 2007. Organic ups and downs are an extremely healthy part of a real estate cycle. Injecting with steroids (easing credit too much) does help the market, but eventually causing a crash. Sure, I would like a robust real estate market to continue on, but not at the cost of the eventual crash. If it can't continue on naturally, that just means for now, we have hit a bump and please let it work itself out, as it always does, when policy maker do not try to inject non-organic matter.
One guideline change that I think would be welcomed out in the market is that they need to remove the seven year timeframe with anyone with a foreclosure back to four years. That would marginally help the market in Arizona. That would not be very radical in guideline changes as that was the standard for many years.
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?
TThe downfalll was when the score system came into place. WHo the heck said you can decide character and credit worthiness from simply a credit number. DId credit when you had to earn the title of an underwriter and loan officer. Fact very simple you made enough bad loans you lost your job. Horrible conflicts of interest and the banks pulled the scam if the century stealing equity and blowing out their competition. Rinning up appraisal costs to say nothing of the "E" Signing. Get rid of the Dodd Frank and the idiots that sponsored this. Have Barney Frank accountable for owning a AMC. Imagine he sponsored the bill and he owns an AMC. Interesting he retired so he couldn''t be caught or prosecuted.
It has nothing to do with underwriting guidelines and ability to repay. They just do not want to tie up money for 30 years at current rates!!! AMC's are a waste of consumer money. Putting a layer of BS between lender and appraiser does not serve anyone but the AMC's who take most of the money and cannot get competent appraisers because they are paying so little. Meanwhile appraisals cost 2 to 3 times as much as they used to. Better solution: Have assignments all fed into a central computer system by zip codes. When the appraiser gets assigned the work via random take your turn assignment, there is no conflict of interest problem.