January 24th, 2012 4:12 PM by Gregg Mower
Boy right now is the hardest time ever to get a home loan done for anyone. I have been in this business for 28 years and started when interest rates were at 12.5% and we did not have computers. It was tough only in the fact that we were doing refinance transactions for people that had 18%,19%, 20% mortgage interest rates and problem was the sheer volume of business we had. At that time if you qualified and your income made sense we did the loan. If you needed a gift from a family member no problem get a letter and prove they had received the money. If you were self employed we got your tax returns and if they made sense we did the loan. The appraisals at that time were taking up to 6 months and posed a challenge, but as the clients were waiting for the appraisal to come in the interest rates were dropping so most customers did not mind the wait. We would just update the file with new pay-stubs and bank statements as they came in. When we took the application we told the client what their payment would be and what it would cost to get the loan and that is what they could count on, if you didn’t provide what you told your client they could go to another lender. Sure we broke down the closing cost for the client and it was confusing to them, as most people don’t buy houses every day, but they knew the 2 basic numbers that were and still are the most important to a client are; 1 what will my monthly payment be and 2 how much money do I need to get the house or refinance. We could teach our clients how to pay off their mortgages early, we could put a move up plan together for clients, we could counsel them on their credit and basically not worry about getting sued for giving people our opinions.
In today’s lending world we have moved into the absurd where our “good faith” estimate of closing costs is 4 pages long and reads like a tax return. When we give the client this form we cannot change it which means that if we have quoted a rate that is what it is and the same with the fees. In order for us to change this form we need a documented “change in circumstance” to happen, like an act of God. Currently , in order for anyone from a mortgage company to talk to a client regarding rates and programs that person has to be licensed und the National Mortgage Licensing System the NMLS. Under this license there are certain rules and procedures that a licensee must do in order to communicate to a client and are culpable for their actions, so you will not get any extra advice from a licensed Loan Officer for simple fear of retaliation if they were wrong. As for lenders or the companies that actually give out the money they are regulated by the brand new Consumer Finance Protection Bureau (CFPB) and the rules they are stricken with are far too many to even try to name and the biggest issue is that there has been no precedence set for Lenders to follow. So if they were to try to just lend money on common sense they could be fined, shut down or imprisoned so they are not about to take any risks for anyone. I have always known that no one loan is worth your license, so for a lender if there is even a hint of funny business that deal will be shut down faster than a hot knife goes through butter.
When applying for a mortgage in today’s environment you must be prepared to have patience of steel, and don’t blame your Loan Officer for asking for crazy things, if they had their way they would not have to ask for crazy stuff at all. This again is punishment to everyone for the past actions of a very few number of people. You can write your elected officials but unless it comes with a campaign contribution it will fall on deaf ears.
Again I love to get comments.