Will Someone Please Turn On The F@#king Radio????

As each day passes, new loan guidelines continue to prove that those setting the policies are clueless. After all, the guidelines are created to prevent lenders from extending credit to borrowers that may be susceptible to default creating a loss. Denying a loan should be for such reasons as the loan is believed to have probability for default. Yet, loans are being approved with a 3.5% down payment, credit scores below 620, no cash reserves, unstable job history and high debt to income ratios. Quality loans are being denied not for likelihood of default, but because of fear they might not be able to be sold to investors.

Being in the mortgage industry for almost 10 years has had its highs and lows. This business has allowed me the opportunity to do things I never dreamed possible. I love it and all the headaches that come with it. However, many of my close friends and colleagues in the industry would agree; the mortgage industry has left a lot of casualties and scars over the last few years.

The following message was sent to me by a good friend in the mortgage biz:

dude, i have been getting my ass kicked up and down the block this year. so many deals lost, so many different reasons. beat up by clients, used by consumers, picked off by not only competitors, but my former mentor – the guy who taught me the business stole a deal from me. appraisals, wet feet, whatever. you name it, i’ve lost a deal and the associated input of time on it this year. brutal. 2 major ‘wanna throw in the towel’ moments. since so many of our colleagues are always acting like they shit roses and diamonds, i appreciate an authentic grumbling now and then. thanks for sharing. hang in there and lets chat soon.

My most recent defeat came as a strong blow. This applicant was someone who had many compensating factors. First, they were putting down a sufficient amount, over 25%, so the loan to value would have been below 75%. They had documented liquid assets over 2 times down payment amount, so there were substantial reserves. The appraisal on the home was solid and showed the home was worth $14,000 above the sales price. The borrowers also have an extremely low debt to income ratio, below 14% in total, with credit scores in the high 700′s.

Reason for denial – declining income too drastic to consider stable income. The borrower’s business sales had dropped. This income was not the applicant’s salary; rather income not even used or needed to qualify. This was extra income left in the business known as “profit”.

Former Citibank CEO, Chuck Prince, famously said “We have to dance until the music stops.” ………. Will someone please turn on the f@#king radio?