Rates drop, re-finances up

Interest rates dropped after the Fed's Minutes were released.  Rates are lower than they were 16-months ago, fueling a rise in mortgage re-finance applications for lenders.

With this comes new activity and false hope that the phones will continue to ring and paychecks will continue to flow through January. 

But what about after January?  With the Feds concerned about a global slow down and an increasingly strong US dollar, we have to wonder if this will affect US consumers and the US economy.  Some forecast that stocks will remain flat in 2015 and others that we may see a mild dip.

If there's any truth to any of this, loan officers need to keep a balancing act between refinance activity and new purchase business.   You do not know where the market will go at this juncture.  Don't think that your realtor referral source won't notice you are not in her or his office asking for business - in fact, they will think you're not there and that you're making money while they are not selling houses. And, that will fuel jealousy and annoyance that you really only want their business and nothing more (which of course is true, but who wants to face that reality when the chips are down?) and they will cut you off.

So, balance your sales approach - - take the re-finance business and give the best service you can so those folks can and will refer you to their friends seeking to re-finance.  In fact, hand them three business cards and ask them to refer three friends.

And, if one of those friends is house shopping, refer them right back to your Realtor who is closing on fewer homes today then he/she was closing just a few months ago.   The referral back will pay in huge dividends going forward

Mortgage Compliance, can you afford not to?

Mortgage Banking Regulatory Compliance - you can't afford not to!

Mortgage Banking has evolved, as life seems to, and change demands change.  There was a time when Mortgage Bankers served a vital link between borrower and access to credit that large banks did not serve and Mortgage Brokers could not provide.

Mortgage Bankers set up a Sales Department to reach out to borrowers, a Risk Management Department to set interest rates and sell the loans to secondary, an Accounting Department to settle out the financial transactions, a Processing and Underwriting Department to process, underwrite and approve the loans, and of course a Closing Department to work with title companies to close and fund the loans.

In 2008, as the sub prime market imploded there was a tremendous shift to mainstream mortgage bankers from sub prime lenders who no longer could access credit on Wall Street.  This intense volume that was also under pressure by borrowers seeking to refinance at lower interest rates, as those begin to tumble downward.

In 2009, main stream mortgage bankers and Banks began to realize that the unsavory types had crept into the mortgage world previously occupied by the professional lenders.  All the Tom, Dick's and Sally's who put a shingle out and were fleecing borrowers with 120% LTV loans, Neg Amort loans and other predatory types of loans - came running to Bankers and Banks because they could not deal with "change" as they found their mortgage brokers closing in response to Wall Street's inability to purchase those previously hot loans that came with great rates for investors.

As a result of that and the economy, which saw unemployment well above 8% and people were losing jobs everywhere, mortgages began to default left and right.   All of a sudden a lender with a .80% 2-year default or a 1.02% default were seeing defaults rise to 3% and higher.  This caused panic in the mainstream lending environment.

No one knew if it was fraud or the economy, but no one cared either way.  They wanted the defaults to stop because big banks who sold loans at a great profit to one another began litigating over whether a loan was improperly underwritten which could then trigger a buy back.  It became an intense case of a hot potato - who had the loan and who was trying to get whom to buy the loan back because it was 30 or 60 days late.

In came the US government.  First they put in rules to license and professionalize those individuals in the mortgage world; to weed out the unsavory individuals who had come from the brokers that were doing subprime loans - and many of whom were thieves working with straw borrowers and stealing money by lying on mortgages unknown to banks, bankers and other parties who were severely hurt financially and who's reputation were negatively hurt by such acts.

Then came the many, many underwriting changes that tightened credit access to borrowers.

And, in the interim, HUD (who had taken control of Fannie and Freddie) and the new Federal oversight - the Consumer Protection Financial Bureau (CPFB) began to enact laws and regulations that dictated lending.  Those laws and regulations impacted everything from mundane disclosures, timing of said disclosures to what constituted "predatory lending" including "high cost loans" and what was a proper loan - i.e. not lending to those who could not afford a loan, also called the "Ability to Repay" loans under the Qualified Mortgage "QM" theory.

 These seem rationale and in fact, they are.  However, to comply with these things required an army.  Lenders were scrambling to A. Figure out the new law.  B.  Figure out how it affected them.  C. Figure out how to implement it. C. Figure out who was responsible in the company to make sure that these things were happening.

All of a sudden, Mortgage Bankers saw that instead of the five (5) departments outlined in the beginning paragraph, they needed a sixth (6th) department.  An Internal Auditing Department also known as a "Compliance Department" that reviews all the forms and systems and audits select files to insure compliance with hundreds of federal, state, agency, investor and internal credit overlay regulations and guidelines.

If this department did not exist a lender faced serious consequences that include:  1.) Buy back of loans from banks who find the loan does not conform to lending requirements and 2).  Serious regulatory retaliation for flouting the rules and regulations of state and federal Regulators.

One buy back, one regulatory fine could and does wipe out profits and could result in a company facing serious financial challenges and stresses.  Just ask Bank of America, JP Morgan and others who have paid billions and now have openly questioned the wisdom of lending FHA loans in a move to defend themselves from government regulators.

This sixth (6th) department is costly, however.  Typically, it needs to be headed by an attorney who can interpret legal regulations so that those can be implemented by management and the Compliance Department that oversees compliance and internal auditing.

Any company putting out a product has someone on board reviewing the quality of the product that is put out to accomplish basically two goals:  1. To get repeat business because the product is of excellent quality.  2. To defend against lawsuits brought against sloppy products or dangerous products that harm a consumer on some level.

This is a new concept to Mortgage Bankers who never had to deal with this before.  They view this as a cost of doing business that can't be passed onto the consumer (pricing doesn't price in this cost as it has remained flat).  But, regulators require that lenders eliminate mistakes in mortgages and that loans are perfected at point of origination.   In addition, there are reports to managers and internal reviews that must be done and must be produced to an outside audit to show the company is actually doing these things and is on the look out to make sure their products conform to the laws.

The bottom line is that these departments are a cost of doing business for a mortgage banker and these departments will bring with them significant costs that Regulators in their "high cost" calculations have pretty much made sure lenders can not "price in" these costs to the consumer to offset them to a net zero effect.

In other words, expect to spend a lot of money in this department.

Looking at the business it is clear that small and mid-size Mortgage Bankers simply can not afford these departments and simply can not afford not to have these departments.  Many are holding out hoping to remain under the radar of regulators while issues about buy backs get sorted out (can a lender force a loan back because, in reality, it just is not performing and they scoured the file to find one, tiny, small mistake and they called out as "we gotcha, you have to buy this bad loan back now or we will sue you".   And, do not think for one minute that banks do not do that to Mortgage Bankers.

This is not going away.  Lenders need these departments.  This requires lender to either bite the bullet and open, fund and get behind this department - or they need to A. Close  B. Merge or C. Sell to another lender.  Period.

According to industry experts, any lender not closing 25 million a MONTH is just not going to be able to afford to comply and in the end - be it in the next few months or the next one to two years, will be forced into A, B or C listed above.

Let's look why lenders under a 20 to 25 monthly million in loans won't make it:

Say you're lender is closing 12 million a month.  And, it has three to four investors.  In this environment, they already are pressured to give more to one lender to get preferred pricing but fear doing that to alienate lenders 2, 3 and 4 who they need in case lender 1 makes a negative business move.  So, that puts their gov pricing at say 300 to 250 basis points and their conforming say at 250 basis points.

Say they are doing 50/50 in business.  So, they are grossing on average 275 basis points.   And their average loan size is around 180,000 dollars, which outside of any growing market in the US is pretty much on target.

They are grossing 330,000.00 a month.  LO's will take $100,000.00 in commissions and costs (base salaries, volume bonus, company FUTA/SUTA/UI costs, benefits, et al)    The remaining 220K now goes to support staff salaries.   If you have 12M a month @ 180K average loan; you're kicking 67 files out a month.  That requires a minimum of 2 underwriters and 2 processors.  That's 25K in salaries, bene's and other employee costs right there.  Now you're left with 195K to pay for the salaries of the people in accounting, closing, pricing/secondary.   That's another 40K a month spread out over those people - which is on the low end.  That 195K is now 155K.

You need to put 10% of your gross in reserves for buy backs - so that 10% of the original 330K.  So, your 195K is now reduced to 160K.

Then there's rent, leases, phones, copiers, and all the other fixed costs which will run the gamut depending on how many offices and if you're in a high rent or low rent district.  Most lenders pay out about 50K a month for these services if doing this amount of loans. 

All of a sudden you're left with 110K and you still have to pay the receptionists, the owners and you have to save for the annual audits and the attorneys.  Financial audits alone will cost over 50K and attorney retainers run around 70K a year.  That's 120K a year - or 10K a month. 

Now you're at 100K left.  If you've invested millions into a business, you expect to make a tad more than the average salaried person as you need to return the investment.  Most owners earn over 180K a month in this area and that reduces the available cash to 85K which seems like a lot - but there are a million things not listed including E&O insurance, general liability, sexual harassment insurance, employee training, previous unpaid costs, and, of course, the costs to appraisers, title companies, Fannie/Freddie, DU/LP, credit reports et al that were not caught or borrowers refused to pay - and do not forget that one mistake on a Good Faith must be paid by the lender. 

That 85K quickly drops to 10K or less.

Which means, there is no cash left to bring on a department at will cost about 120,000.00 USD a years.

So, either you up your volume (and increase your costs) or you close, merge or sell - because you can not afford to ignore compliance and adherence to compliance.  And, at this volume, you can not afford to pay for it.

Which means that in the next few months and years there will be a migration and Mortgage Bankers who are local or regional will begin merging with bigger players leaving large Mortgage Bankers licensed in 30, 40 or all 50 states and Banks and Credit Unions providing access to credit to borrowers.

Just as the days of Mortgage Brokers has come and gone, the days of small and mid sized mortgage bankers are about to end as well faced with the regulatory changes imposed upon bankers as a result of greedy people on wall street selling sub prime loans, greedy loan officers hawking them and con artists who took on roles of loan officers, realtors, attorneys, appraisers and even the average Joe on the street - who stole from lenders; requiring these changes to defend the financial market from a repeat.

Mortgage Banking Regulatory Compliance - you can't afford not to!

Mortgage Banking has evolved, as life seems to, and change demands change.  There was a time when Mortgage Bankers served a vital link between borrower and access to credit that large banks did not serve and Mortgage Brokers could not provide.

Mortgage Bankers set up a Sales Department to reach out to borrowers, a Risk Management Department to set interest rates and sell the loans to secondary, an Accounting Department to settle out the financial transactions, a Processing and Underwriting Department to process, underwrite and approve the loans, and of course a Closing Department to work with title companies to close and fund the loans.

In 2008, as the sub prime market imploded there was a tremendous shift to mainstream mortgage bankers from sub prime lenders who no longer could access credit on Wall Street.  This intense volume that was also under pressure by borrowers seeking to refinance at lower interest rates, as those begin to tumble downward. 

In 2009, main stream mortgage bankers and Banks began to realize that the unsavory types had crept into the mortgage world previously occupied by the professional lenders.  All the Tom, Dick's and Sally's who put a shingle out and were fleecing borrowers with 120% LTV loans, Neg Amort loans and other predatory types of loans - came running to Bankers and Banks because they could not deal with "change" as they found their mortgage brokers closing in response to Wall Street's inability to purchase those previously hot loans that came with great rates for investors.

As a result of that and the economy, which saw unemployment well above 8% and people were losing jobs everywhere, mortgages began to default left and right.   All of a sudden a lender with a .80% 2-year default or a 1.02% default were seeing defaults rise to 3% and higher.  This caused panic in the mainstream lending environment.

No one knew if it was fraud or the economy, but no one cared either way.  They wanted the defaults to stop because big banks who sold loans at a great profit to one another began litigating over whether a loan was improperly underwritten which could then trigger a buy back.  It became an intense case of a hot potato - who had the loan and who was trying to get whom to buy the loan back because it was 30 or 60 days late.

In came the US government.  First they put in rules to license and professionalize those individuals in the mortgage world; to weed out the unsavory individuals who had come from the brokers that were doing subprime loans - and many of whom were thieves working with straw borrowers and stealing money by lying on mortgages unknown to banks, bankers and other parties who were severely hurt financially and who's reputation were negatively hurt by such acts.

Then came the many, many underwriting changes that tightened credit access to borrowers.

And, in the interim, HUD (who had taken control of Fannie and Freddie) and the new Federal oversight - the Consumer Protection Financial Bureau (CPFB) began to enact laws and regulations that dictated lending.  Those laws and regulations impacted everything from mundane disclosures, timing of said disclosures to what constituted "predatory lending" including "high cost loans" and what was a proper loan - i.e. not lending to those who could not afford a loan, also called the "Ability to Repay" loans under the Qualified Mortgage "QM" theory.

 These seem rationale and in fact, they are.  However, to comply with these things required an army.  Lenders were scrambling to A. Figure out the new law.  B.  Figure out how it affected them.  C. Figure out how to implement it. C. Figure out who was responsible in the company to make sure that these things were happening.

All of a sudden, Mortgage Bankers saw that instead of the five (5) departments outlined in the beginning paragraph, they needed a sixth (6th) department.  An Internal Auditing Department also known as a "Compliance Department" that reviews all the forms and systems and audits select files to insure compliance with hundreds of federal, state, agency, investor and internal credit overlay regulations and guidelines.

If this department did not exist a lender faced serious consequences that include:  1.) Buy back of loans from banks who find the loan does not conform to lending requirements and 2).  Serious regulatory retaliation for flouting the rules and regulations of state and federal Regulators.

One buy back, one regulatory fine could and does wipe out profits and could result in a company facing serious financial challenges and stresses.  Just ask Bank of America, JP Morgan and others who have paid billions and now have openly questioned the wisdom of lending FHA loans in a move to defend themselves from government regulators.

This sixth (6th) department is costly, however.  Typically, it needs to be headed by an attorney who can interpret legal regulations so that those can be implemented by management and the Compliance Department that oversees compliance and internal auditing.

Any company putting out a product has someone on board reviewing the quality of the product that is put out to accomplish basically two goals:  1. To get repeat business because the product is of excellent quality.  2. To defend against lawsuits brought against sloppy products or dangerous products that harm a consumer on some level.

This is a new concept to Mortgage Bankers who never had to deal with this before.  They view this as a cost of doing business that can't be passed onto the consumer (pricing doesn't price in this cost as it has remained flat).  But, regulators require that lenders eliminate mistakes in mortgages and that loans are perfected at point of origination.   In addition, there are reports to managers and internal reviews that must be done and must be produced to an outside audit to show the company is actually doing these things and is on the look out to make sure their products conform to the laws.

The bottom line is that these departments are a cost of doing business for a mortgage banker and these departments will bring with them significant costs that Regulators in their "high cost" calculations have pretty much made sure lenders can not "price in" these costs to the consumer to offset them to a net zero effect. 

In other words, expect to spend a lot of money in this department.

Looking at the business it is clear that small and mid-size Mortgage Bankers simply can not afford these departments and simply can not afford not to have these departments.  Many are holding out hoping to remain under the radar of regulators while issues about buy backs get sorted out (can a lender force a loan back because, in reality, it just is not performing and they scoured the file to find one, tiny, small mistake and they called out as "we gotcha, you have to buy this bad loan back now or we will sue you".   And, do not think for one minute that banks do not do that to Mortgage Bankers.

This is not going away.  Lenders need these departments.  This requires lender to either bite the bullet and open, fund and get behind this department - or they need to A. Close  B. Merge or C. Sell to another lender.  Period. 

According to industry experts, any lender not closing 25 million a MONTH is just not going to be able to afford to comply and in the end - be it in the next few months or the next one to two years, will be forced into A, B or C listed above.

Let's look why lenders under a 20 to 25 monthly million in loans won't make it:

Say you're lender is closing 12 million a month.  And, it has three to four investors.  In this environment, they already are pressured to give more to one lender to get preferred pricing but fear doing that to alienate lenders 2, 3 and 4 who they need in case lender 1 makes a negative business move.  So, that puts their gov pricing at say 300 to 250 basis points and their conforming say at 250 basis points.

Say they are doing 50/50 in business.  So, they are grossing on average 275 basis points.   And their average loan size is around 180,000 dollars, which outside of any growing market in the US is pretty much on target.

They are grossing 330,000.00 a month.  LO's will take $100,000.00 in commissions and costs (base salaries, volume bonus, company FUTA/SUTA/UI costs, benefits, et al)    The remaining 220K now goes to support staff salaries.   If you have 12M a month @ 180K average loan; you're kicking 67 files out a month.  That requires a minimum of 2 underwriters and 2 processors.  That's 25K in salaries, bene's and other employee costs right there.  Now you're left with 195K to pay for the salaries of the people in accounting, closing, pricing/secondary.   That's another 40K a month spread out over those people - which is on the low end.  That 195K is now 155K.

You need to put 10% of your gross in reserves for buy backs - so that 10% of the original 330K.  So, your 195K is now reduced to 160K.

Then there's rent, leases, phones, copiers, and all the other fixed costs which will run the gamut depending on how many offices and if you're in a high rent or low rent district.  Most lenders pay out about 50K a month for these services if doing this amount of loans.  

All of a sudden you're left with 110K and you still have to pay the receptionists, the owners and you have to save for the annual audits and the attorneys.  Financial audits alone will cost over 50K and attorney retainers run around 70K a year.  That's 120K a year - or 10K a month.  

Now you're at 100K left.  If you've invested millions into a business, you expect to make a tad more than the average salaried person as you need to return the investment.  Most owners earn over 180K a month in this area and that reduces the available cash to 85K which seems like a lot - but there are a million things not listed including E&O insurance, general liability, sexual harassment insurance, employee training, previous unpaid costs, and, of course, the costs to appraisers, title companies, Fannie/Freddie, DU/LP, credit reports et al that were not caught or borrowers refused to pay - and do not forget that one mistake on a Good Faith must be paid by the lender.  

That 85K quickly drops to 10K or less.

Which means, there is no cash left to bring on a department at will cost about 120,000.00 USD a years.

So, either you up your volume (and increase your costs) or you close, merge or sell - because you can not afford to ignore compliance and adherence to compliance.  And, at this volume, you can not afford to pay for it.

Which means that in the next few months and years there will be a migration and Mortgage Bankers who are local or regional will begin merging with bigger players leaving large Mortgage Bankers licensed in 30, 40 or all 50 states and Banks and Credit Unions providing access to credit to borrowers.

Just as the days of Mortgage Brokers has come and gone, the days of small and mid sized mortgage bankers are about to end as well faced with the regulatory changes imposed upon bankers as a result of greedy people on wall street selling sub prime loans, greedy loan officers hawking them and con artists who took on roles of loan officers, realtors, attorneys, appraisers and even the average Joe on the street - who stole from lenders; requiring these changes to defend the financial market from a repeat.

The Funding Source Syracuse | Blogspot: How to successfully navigate getting a mortgage...

The Funding Source Syracuse | Blogspot: How to successfully navigate getting a mortgage


...: How to successfully navigate getting a mortgage So, you've decided its' time to buy a house or condo/co op.  Prices for homes are...

How to successfully navigate getting a mortgage


So, you've decided its' time to buy a house or condo/co op.  Prices for homes are stabilizing again and let's be honest, today's rates remain at historical lows.  It's a perfect mix to buy.

When you're ready, you need to remember two things.  1.  The person you are meeting about your mortgage is not approving your loan and probably can't properly qualify your loan.  He or she will run it through a program called "LP" or "DU" which issues a conditional term sheet that empowers some to feel that they know all and your loan is approved   Stop them right there.   2.  The person who approves your loan is someone you probably will never meet.

Deductive reasoning states that if you're not meeting the person with the power to approve your loan, then that person is not meeting you. 

How do you sell your financial ability to that person.

There's one quick answer

Do not play the "manana" game when it comes to getting documentation into the bank.  Before you meet with the bank, make copies of the last two years of your income taxes with all schedules and 1099's and W2's (etc) attached to them.  Do NOT leave one page out.

Make copies of the last two months of every bank statement and investment account that you have. Do not leave out blank pages, even if they are advertisements.  Include them.

Make copies of the last 30 days of your income pay stubs from work.

Be prepared to list every employer you had in the last two-years

Be prepared to know what you made from them

Be prepared to list every place you lived in the past two-years

If you rented, make sure you have a piece of paper with the name, address and phone number of the landlord or rental management company from your apartment complex.

If you're self employed, bring everything above plus your K1 or other self employment forms and include the last two-years of your self employment tax returns. 

Make sure that they are accurate and have your Accountant or CPA sign them or write a letter stating he or she reviewed them and it appears to be accurate based on previous year income returns.

Include explanations for ANY late payments on your credit report.  Any.  Period.

Pay off all collection and all judgements prior to applying for a loan.  Keep proof that they are paid in case they still show on your credit.

Take all of that and put it on your lap.  As your loan officer goes through the application process he or she will ask questions that will trigger the need for you to pull all those forms out piece by piece to back up what you're saying.

If you do this - your loan will go into the underwriter and the underwriter will have a complete package to issue out a decision.

If you do not, the underwriter will have a list of things that he or she needs to issue out a decision

And, there is nothing worse than an incomplete loan application when there are numerous other files competing against your file to be approved and closed.

No underwriter wants to keep pulling your file from a rack to put missing information into it.  That files becomes the "cursed file" and a sour feeling develops.  It typically sits when others move

All because information was missing and the underwriter was not understanding the situation.

So, get all your documentation together for the very first meeting.  You'll find this much more successful for you this way

Has the government thrown the baby out with the bathwater? Every day we see qualified borrowers who don't quite fit the new box that the government regulated onto lenders (QM), despite the borrower having a low LTVs and other compensating factors. Yet we, as lenders, can't do those loans, or the interest rates are too onerous. Yet the government continues to beat its drum about home ownership, and have somehow shifted the blame onto the lenders that home ownership has dropped.

We've reached a level of insanity - it appears that the government is sending out two different messages. 

On the one hand, regulators and prosecutors are going after lenders for serious crimes (well deserved) committed in lending and for breaking obscure lending regulatory rules (questionable when compared to the financial bites the government takes out of the lender for this action that could be corrected with censorship and more stringent monitoring). 

On the other hand, the government has rolled out policy makers blaming lenders for not lending to people.  For "tightening credit".  Just recently, Ben Bernarke announced he himself was declined for a mortgage.

Has lending gotten tighter?   Yes, absolutely.  There's two basic reasons why:

1.  If you were riding your bike on the left side of the road and instead of a ticket you found yourself fined 10,000 dollars, what would your reaction be?  Probably to ride your bike either way off on the right hand side, perhaps on the sidewalk and off the street, maybe to not ride your bike that much at all anymore.

That's what has happened with lenders.  No one can argue that some lenders, just as some borrowers, were thieves and deserved everything thrown at them and more.  Those people ruined it for consumers and for those of us who love the mortgage industry.

But, as a result of all of that, lenders have pulled back.  Some estimates show Wells Fargo, for example, doing 82% less FHA loans in 2014 YTD than the same period YTD in 2013.  A shocking reduction in loan volume.

And, let's not forget that the CEO of JP Morgan publicly stated that they may re-think doing FHA loans at Chase, period.  He questioned if the risk exceeded the value to the bank.

Those are normal, sane responses, to what is now appearing to be a government led initiative to take as much cash as they can from banks and publicly go after them with bold print in newspapers and headline news at prime time.   Not good for business.

2.  Let's go back to Ben Bernarke's experience in getting declined.  One wonders if he's out there beating the drums to loosen credit citing a silly reason - that even Ben got declined.  Well, first off, Mr. Bernarke most likely was declined because he recently changed professions.  In the lending world, even before the meltdown, lenders want to see stable income.   If the source of your income has changed, even if your current income is in the 7 figures, it is not stable. It could end tomorrow.  And, that does not support you paying a 10, 15, 20, or 30 year mortgage.  So, you need at least 2-years worth of stable income from a current profession (you can change jobs, but you need to be in the same profession).  Mr. Bernarke went from employed status to a different field.  He fell out of the basic lending requirement.

That's not insane lending.  That's sane lending.

_____

So, on the one hand we have the government (including policy makers at HUD) stating that they don't understand why lending is tighter and others saying that lenders went too far in being conservative.

On the other hand, we have lenders that were taken into the back alley and beaten to a bloody mess for lending (again, some deserved it.  Others did not).  And, they have learned their lesson.

And, on the third hand, you have the CFPB issuing out new rules and requirements and teaming up with other federal regulators with laws and enforcement actions that actually re-enforce the beating up of the lenders that we've witnessed recently.

It's time that the policy makers and the regulators sat in the room together and talked about what they want.  Do they want stricter rules to reduce the chance that we have the economic meltdown or do they want lenders to loosen up a bit and lend more without being afraid of being faced with legal issues or delinquent borrowers?

There is a way to do this.  But not by sending mixed messages.  

One way may be for the government to admit that in 1994 they started this mess by setting up policies for lenders to lend more money to more people to encourage more home ownership.  That started the cycle to irrational lending and irrational housing increases that bubbled and burst and allowed criminals to come in and destroy consumers and bankers who were honest, ethical and doing their jobs as best they could.

The next step would be for there to be a balanced approach.  Yes, lending is too tight.  Yes, there are consumers who truly deserve mortgages who would be excellent borrowers that today are going to be declined.  But, until the regulators get on board with the policy makers, they will not get their homes.

Mortgage

I'm asked frequently about FHA mortgages all the time.  People are always asking me how they could get approved and where to go.

Shocking news to me today - I found out that a fairly large regional bank just got their HUD approval to do FHA loans and they have.....get this.......no idea how to do them and no one on staff who is qualified to do them and they need someone with an FHA DE to do them.   Yet, they pull off huge mergers that include stocks and huge sums of cash.

Wow.

If your local bank does not offer an FHA loan or has no clue; I am speechless.

As for you - go on hud.gov website and navigate to see who in your area is an approved FHA Lender.  That's your best first step!