Are Mortgage Lending Policies Punishing Home Buyers?
An issue that affects not only buyers, but sellers as well; perhaps the reigns and requirements are too tight now. Having done some recent digging around on places like CNN, Bloomberg, and Innman News, I think it's safe to say the pendulum has swung too far in the opposite direction. The experts that make contributions on these "big guys" seem to all agree. A very weak jobs report smiting down long term rates has raised many an eyebrow and raised some concerns in the real estate industry. I think I have to cast my lot with them being an active Ohio Realtor.
It's become all to common to receive a buyer or seller real estate lead, and roadblock after roadblock trying to get the average buyer pre-approved for a home loan, or upon taking a listing and trying to assist interested buyers who struggle to get approved is an obvious downer for the seller. Even those lenders that advertise they can go down to a 580 credit score are ineffectual for most, considering the huge amount of tough hurdles and hoops buyers must overcome to get a loan on that low a score.
It may not sound right, but the big dogs are reporting delinquencies are too low. That's right, too low. Think about it, statistically that means that credit requirements are too tight, punishing healing households and home buyers starting out young in life (or starting over), and why there's nearly two million homes sitting around the U.S and should be much less. So first, lenders go hog wild with sub-prime lending, handing out loans like candy to anyone for the asking, cause their own fiscal headaches and add to the consumer's grief, and now we come full circle. I think they're not really paying attention like they should. If underwrites are too loose, you get high risk credit on the books but if the underwriters are too tight, no loans on the books and loans are a lender's bread and butter, homes sit vacant and start deteriorating.
It's funny to me, the bigger a business, the more poorly run it gets. You'll notice this with companies like Time Warner or perhaps our own government. It's exasperating waiting for companies, lenders or other, to get their act together, do the right thing and balance the needs of the consumer with needs of the company. If it's not greed coming back around to bite them in the ankles, taking them down a notch, paranoia and self preservation inhibit healthy growth and still harms the consumer.
One of the more balanced lenders in these times that I know of is 1st Financial, and yes, a preferred vendor of Berkshire Hathaway Home Services - Professional Realty. However, I was using them before coming aboard with BHHS (You can request them through our home loan services). Even then, they're subject to the existing financial lending environment.