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Tuesday, October 4, 2011

Ask the Loan Man - October 2011

Are you guys still lending?!?

It is kind of amazing to me but I get asked this question all the time. It makes me wonder what people think I am doing at the office all day every day. Would you ask a dog groomer if they were ACTUALLY bathing dogs in there? But I digress…. 

It is definitely more understandable why they ask me this question with articles put out by the Associated Press that discusses how mortgage rates are at all time lows BUT “Many lenders are requiring 20% down payments and strong credit scores to qualify.” I am wondering what is their point?  They offer some information but that last statement if true is not the majority of the market. We are closing loans on homes with two programs that require ZERO down payment, and several other programs that require anywhere from 1% to 5% down payment. Now before you all write to me and call me and tell me that me and my kind ruined the market with no money down loans, let me tell you that these are VA, USDA, FHA, FNMA and FHLMC mortgages and have been around for decades and they are still here and NOT the cause of our problems. You have always had to prove your income and qualify for these loans. The issue we had was that people did not need to qualify for No Money Down deals some years ago and that was what the issue was. Let me further add that professionals that have worked through this period and are still here are the good guys, the people that advised against the bad loans when they did not make sense. The bad guys have left the building and are looking for the next quick buck.

I digress again. Let me just tell you what is going on in Sonoma County right now. In August 2011 and we had 659 homes sell (28 were new homes) and 857 refinances close. My own company did well in August but much better in September so I imagine other companies did more business as well. So the answer is YES! We are still lending money.
Is it harder to get a home loan? Absolutely it is. It takes more work on the part of the borrower and the loan officer and the appraiser, underwriter, processor, funders as well but this is what we do for a living so we continue. The problem is not that we need to qualify for the loans, the problem is that we have been forced by legislation and tightening guidelines to answer questions that we have never had to answer before and it takes more time and some are difficult to answer. If you sell things on Ebay and put a lot of deposits into your personal account, we will ask about the deposits and a letter of explanation and a paper trail to support. We pull credit at the beginning, middle and end of a transaction just to make sure nothing has changed. We need up to the minute bank statements and paystubs for the same reason.

Some of these changes are not fun and some add time to the transaction but the professionals work through it and I personally try and anticipate issues and have some fun with it. Send me an email and I will send you my “Ten Commandments of Applying for a Mortgage” as an example.

Please email or call me with any real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article.

Hans Bruhner is a branch manager for First Priority Financial. Hans is licensed by the CA DRE # 01085398 and NMLS #243484 and First priority is licensed by the CA DRE # 00652852 and NMLS #3257.  If you have a question, please contact him at (707) 887-1275 or