(Originally published 09/25/12.)
Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), said there would be enormous benefits to the nation’s economy if mortgage lending standards would return to normal.
Earlier this month, NAR released its September Nationwide Survey of Realtors. The survey reflected widespread concerns over continuing tight credit conditions, delays in mortgage approvals, and excessive requirements for documentation. “There is an unnecessarily high level of risk aversion among mortgage lenders and regulators,” Yun remarked. “A loosening of the overly restrictive lending standards is very much in order.”
In order to overcome any problem, you need to know the true causes. Over the past few years, Fannie and Freddie have forced banks to repurchase billions of mortgages for reasons ranging from defaults, to fraud on mortgage applications, to reasons having nothing to do with underwriting defects. At the extreme, lenders have been forced to repurchase loans for benign reasons such as a missing document, signature, or date on a disclosure! Therefore, to protect themselves, lenders have raised their lending standards beyond what Fannie and Freddie require, demanding extensive documentation from borrowers and scrutinizing appraisals for the smallest imperfection.
“Lenders have pulled back because they don’t know what their future exposure around repurchases is going to be. Ultimately that has limited the availability of mortgage credit,” said Maria Fernandez, Associate Director for Housing and Regulatory Policy at the Federal Housing Finance Agency. At the same time, banks face new regulation in the coming year that could keep them in a defensive position. One provision of the Dodd-Frank financial reform laws, for example, carries potentially steep penalties if banks don’t properly ensure a borrower has the capacity to repay a loan.
Yet, despite these problems being experienced industry-wide, at Mortgage Wealth Advisors,
we are originating and closing loans, quickly, efficiently, and on schedule.
We are surpassing the expectations of our borrowers, Realtor partners, and referral sources.
- We are recognized experts in our field.
- We know “The Rules” of our industry and what underwriters want to see.
- We expertly position our borrowers before they find a new home.
- And we don’t employ mere mortgage salespeople simply pushing product.
Want proof? Watch for my upcoming newsletters, arriving in your email box over the next few weeks.
And if you’re a Realtor frustrated by your experiences with mortgage lenders, call me. Let’s discuss how I can put a smile on your face and make your life a whole lot easier.
Warren Goldberg is a Certified Mortgage Planning Specialist and a published author. His interviews include Blog-Talk Radio, Newsday, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.
Wall Street Journal, Regulator Vows New Rules to repair Mortgage Markets, 9/10/12
Mortgage News Daily, NAR: Lending Standards Holding Down Home Sales, Growth, 9/17/12