Well - isn't this a fine how-do-you-do! In 24 years in mortgage lending, I have never been out of a job. What's scary is what happened to us could happen to any bank, credit union or mortgage broker without notice.
Last Thursday afternoon, April 22nd, we were notified that our warehouse line was pulled and we no longer had the ability to funds loans. This basically means, we can't do mortgages.
My employer made a decision to exit the mortgage business. This left me in a very precarious perdicament as I had 4 loans scheduled to close the week of April 26th.
I had to place these loans with other lenders, and tell the 4 borrowers who thought they were buying their homes this week they wouldn't be closing. I was able to arrange to close the WHEDA loan on time as scheduled, but had to delay the other 3. I also had to find homes for the numerous May and June closings I have in my pipeline.
In this "recovering" economy (It's not recovered yet - believe me!) everyone is at risk. Banks, Credit Unions and Mortgage Bankers and Brokers don't have millions of dollars sitting in their vaults waiting to close loans, they have warehouse lines. These lines of credit can be from the Federal Reserve, or other lending institutions. They fund the loans from these warehouse lines, then when the loans are delivered to secondary market (Fannie Mae, Ginnie Mae, Freddie Mac) they are reimbursed the loan amounts and can then loan to the next borrower.
What's happening throughout the US that's causing the situation at my employer? Wth all the foreclosures and bad loans, the regulators are requiring more assets be placed in loan-loss reserve accounts to cover projected loan losses. Lenders transfer the required assets to the reserve account. That takes funds away from their net worth, as this loan loss reserve acccount can not be included in an institution's net worth. This drops their "rating" down maybe to a C or D and makes them ineligible for their line of credit. No warehouse line, not much money available to fund loans and you're out of business.
I was talking to a stock-broker friend of mine who said you don't hear about it, but it's happening all over the US. The FDIC is coming in right before 5:00 in the afternoon with their suits and brief cases, informing everyone that the doors are closed and here's the new owner that's taking over your bank. Scary isn't it.
I'm weighing my options. I'd like to work somewhere I can apply my vast knowledge to turn around a mortgage department and make them one of the top lenders of choice. I've got a few in mind - I'll keep you posted.
Tuesday, April 27, 2010
Thursday, April 15, 2010
LENDING IS VERY FRUSTRATING
Most days I don't like my job. 24 years in mortgage lending and some days I lean towards checking the want ads for a job.
I've got a massive headache as we speak. When we take a loan application, we need 30 days of the most recent pay stubs, 2 months bank statements, 2 years worth of W-2's and Federal tax returns with all schedules. We send out verifications of employment and deposit, wait for a week or two to get them back, we ordered the appraisal that takes 2-3 weeks to get. Then we get the file ready to submit to underwriting. Guess what - the last bank statement we got is too old. Pay stubs and bank statements can't be over 30 days old. We call and request newer ones. By the time we get those, something else is too old. It's a vicious cycle.
Or we get a new pay stub and the borrower isn't working 40 hours. Why are his hours less? Is his job in jeapordy? There goes the red flag on income.
It's no longer a question of how can help a borrower get into a home, it's what can we find to turn a borrower down.
If it's not the borrower income or assets that's the problem, it's the property. They want 3 identical comparable sales of homes that have sold in the last 3 to 6 months in similar neighborhoods. That can be a problem. Around here, a home in the country on 15 acres, outside a small rural town for $350,000 will be a problem, as there aren't any comparable sales. Houses in not-perfect condition are becoming a problem. Repairs have to be done by closing, sellers don't have the money to do them, borrowers can't get the loan till they're done.
You request an item from a borrower to solve one problem, and it triggers more needed items.
NSF's on your bank statement can cause your loan to be denied. An isolated bounced check is ok, but if it's a continual thing you may not get a loan.
Haven't had your job for 2 years? Don't have 3 active credit accounts with a 12-24 month payment history? Have miscellaneous undocumentable deposits on your bank statement?
Cash at home you want to use for a down payment? Commissioned? Seasonal employment? Self-employed? Truck driver paid by the mile?
All these things will make getting a loan difficult.
Since I can remember, we got a verification of employment, a check stub and your W-2's for income, a verificaiton of deposit to show you had sufficient funds to close and see what your 2 month average balance was and prove you had cash to close.
It's a different ball game out there folks. Now we get W-2's, Federal Tax returns, every pay stub you ever get, each bank statement you get till closing, we get your tax transcripts from the IRS to see if your tax returns are faked, we get verification from the social security administration to make sure you didn't steal the social security number, we pull your employers name and address off the internet so we've checked the address and phone numbers to make sure it's not a bogus emloyer we're given, we call just before closing to see if you're still employed, ughhh.
When we do a loan, we need actual bank statements, but we usually get print-outs that don't show us account numbers or even the borrower's names. When we do get bank statements they say page 1 of 4 and we only get 2 pages. If it says 1 of 4 pages, we need 4.
Borrowers are getting frustrated with us, we're getting frustrated with our underwriters. Lending is just not fun any more.
I developed a booklet for my homebuyers that explain the 5 parts of a loan, what to do once you've applied for a loan, what NOT to do, and what to expect.
If you're a home buyer and want to find out about the pain-in-the-behind homebuying process, shoot me an e-mail and I'll send you a copy. It will help you understand the hell that is my life, known as mortgage lending.
I've got a massive headache as we speak. When we take a loan application, we need 30 days of the most recent pay stubs, 2 months bank statements, 2 years worth of W-2's and Federal tax returns with all schedules. We send out verifications of employment and deposit, wait for a week or two to get them back, we ordered the appraisal that takes 2-3 weeks to get. Then we get the file ready to submit to underwriting. Guess what - the last bank statement we got is too old. Pay stubs and bank statements can't be over 30 days old. We call and request newer ones. By the time we get those, something else is too old. It's a vicious cycle.
Or we get a new pay stub and the borrower isn't working 40 hours. Why are his hours less? Is his job in jeapordy? There goes the red flag on income.
It's no longer a question of how can help a borrower get into a home, it's what can we find to turn a borrower down.
If it's not the borrower income or assets that's the problem, it's the property. They want 3 identical comparable sales of homes that have sold in the last 3 to 6 months in similar neighborhoods. That can be a problem. Around here, a home in the country on 15 acres, outside a small rural town for $350,000 will be a problem, as there aren't any comparable sales. Houses in not-perfect condition are becoming a problem. Repairs have to be done by closing, sellers don't have the money to do them, borrowers can't get the loan till they're done.
You request an item from a borrower to solve one problem, and it triggers more needed items.
NSF's on your bank statement can cause your loan to be denied. An isolated bounced check is ok, but if it's a continual thing you may not get a loan.
Haven't had your job for 2 years? Don't have 3 active credit accounts with a 12-24 month payment history? Have miscellaneous undocumentable deposits on your bank statement?
Cash at home you want to use for a down payment? Commissioned? Seasonal employment? Self-employed? Truck driver paid by the mile?
All these things will make getting a loan difficult.
Since I can remember, we got a verification of employment, a check stub and your W-2's for income, a verificaiton of deposit to show you had sufficient funds to close and see what your 2 month average balance was and prove you had cash to close.
It's a different ball game out there folks. Now we get W-2's, Federal Tax returns, every pay stub you ever get, each bank statement you get till closing, we get your tax transcripts from the IRS to see if your tax returns are faked, we get verification from the social security administration to make sure you didn't steal the social security number, we pull your employers name and address off the internet so we've checked the address and phone numbers to make sure it's not a bogus emloyer we're given, we call just before closing to see if you're still employed, ughhh.
When we do a loan, we need actual bank statements, but we usually get print-outs that don't show us account numbers or even the borrower's names. When we do get bank statements they say page 1 of 4 and we only get 2 pages. If it says 1 of 4 pages, we need 4.
Borrowers are getting frustrated with us, we're getting frustrated with our underwriters. Lending is just not fun any more.
I developed a booklet for my homebuyers that explain the 5 parts of a loan, what to do once you've applied for a loan, what NOT to do, and what to expect.
If you're a home buyer and want to find out about the pain-in-the-behind homebuying process, shoot me an e-mail and I'll send you a copy. It will help you understand the hell that is my life, known as mortgage lending.
Thursday, April 1, 2010
HOME BUYER TAX CREDIT - 28 DAYS REMAIN
You've only got 28 days left to take advantage of the Home Buyer tax credits for new and repeat buyers. You need to get your offer accepted by April 30th to qualify and the loan must close by June 30th. Up to $8,000 for buyers who have not owned a home in the past 3 years and up to $6,500 for repeat buyers who have occupied a home for 5 of the last 8 years as their primary resicence if they buy another home to live in. Great time for upgrading, downsizing or if you just want a different house. Call or e-mail me for details.
Buying a home in the flood plain soon? Here's a recent event on that topic:
National Flood Insurance Program (NFIP) Authorization
The National Flood Insurance Program’s (NFIP) authorization to issue flood insurance policies expired at midnight on Sunday, March 28 as Congress did not vote to extend the authorization until April 30 prior to leaving for Easter recess. Any property located in a Special Flood Hazard Area (SFHA) may not close until the NFIP obtains authority to issue flood insurance (estimated to be April 12 at the earliest)
HAPPY EASTER EVERYONE!
Buying a home in the flood plain soon? Here's a recent event on that topic:
National Flood Insurance Program (NFIP) Authorization
The National Flood Insurance Program’s (NFIP) authorization to issue flood insurance policies expired at midnight on Sunday, March 28 as Congress did not vote to extend the authorization until April 30 prior to leaving for Easter recess. Any property located in a Special Flood Hazard Area (SFHA) may not close until the NFIP obtains authority to issue flood insurance (estimated to be April 12 at the earliest)
HAPPY EASTER EVERYONE!
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