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Does Your Lender WANT To Say “Yes!”?

As people go through the mortgage process today, I believe that they wonder if their lender has gone insane. Lenders ask for documentation repeatedly, constantly updating, asking for further clarification and explanation for everything. Income, credit, assets and appraisals are scrutinized at a level unseen in my 25+ years. It almost seems like they are trying to find reasons NOT to lend.

But, I assure you, that is not the case. The only way lenders can stay in business is to lend money. It is what funds the operation and pays for salaries, rent and paper clips. Lending is what creates the value of the company. No closings, no revenue, no company.

So why the perception of over-documentation and over analysis when we know the lenders have to make loans? This is the reality of a post-subprime world. Lenders got too liberal and under-documented files and forgot the primary role of underwriting (judging a borrower’s ABILITY and WILLINGNESS to repay the loan) as they approved files. And now, the pendulum has swung back to a very conservative stance. Common sense seems to have been replaced by a “Cover Your Butt Mentality”.

No one is immune. Appraisers error on the side of lower valuations and heightened criticism of a home’s condition.  Underwriters labor over pay stubs, tax returns, bank statements and credit information. Closing agents meticulously examine title and closing documents. Each of them has learned that their mistakes, miscalculations, or errors in judgment (no matter how minor) can result in a loss of their job, a bad loan, and/or monetary damages to their companies.

So, today I just wanted to counsel home buyers. Your lender WANTS to make your loan. However, understand that they have been burned by borrowers, burned by their bad judgment, burned by moronic industry trends of the past. Lenders are going to be a little gun shy. If you can prove that you are willing and able to repay the loan, lenders have lots of money available at incredible (once-in-a-lifetime) rates. When you think your lender is asking for too much, know it’s because they want to say “yes” AND know that their decision is both a good and defendable one.


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6 replies
  1. Bill Nickerson
    Bill Nickerson says:

    I truly appreciate your articles, they are very clear and in a format that everyone can understand. I have been in mortgage banking for 20 years now and have seen everything and nore…more than ever, is the best time to buy!! We have money and lots of it!!! Thank you again for your great articles!!

    Bill Nickerson
    Mortgage Network
    Acton Massachusetts

    Reply
  2. Maurita Bostic
    Maurita Bostic says:

    Thank you for this article. I just experienced a “horrible” lending process. I truly understand that the lenders are “covering their butts”. But they need to do it on time. They are not meeting the scheduled closing date. They should have a system in place to allow them to get all the information they need on time. This particular transaction was over 6 weeks late closing.
    With that said, IT IS A GREAT TIME TO BUY!!! AND WE NEED LENDERS THAT MEET THE SCHEDULED CLOSING DATE.

    Reply
  3. Mortgage Nerd
    Mortgage Nerd says:

    Very true! I try to explain to people that common sense is out the window with mortgage underwiting now. It’s really not whether the underwriter thinks they can make the payments but whether they have the paperwork in order to sell the loan on the secondary market, and cover their butts if the loan turns bad.

    Reply

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  1. […] sure to read this Blog post “Does Your Lender WANT to Say “Yes?” Categories: Conventional Loans, FHA Loans, Jumbo Mortgages, Mortgage Education 101 Tags: […]

  2. […] Does Your Lender WANT To Say “Yes!”? Posted on June 9, 2011 by monthlybuzz via kcmblog.com […]

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