BUYERS BUYERS BUYERS

As the news worsens on a daily basis in regards to the mortgage lending meltdown what we in the Real Estate and Mortgage Industries need are more buyers to buy the homes that are for sale. We know you are out there. In the midst of the problems there is a silver lining. The market will recover, the losses will be absorbed, and hopefully the industry will learn a hard lesson and do things for the correct reason instead of greed. Bargains on homes abound out there; it is a buyers market for sure. Mortgage loans are available to qualified buyers at very low attractive rates. 100% loans are still available at good rates and you can get an FHA loan easily in the 5% interest rate range. With some money down and good credit scores Stated Income loans still exist at very low rates. So if you are thinking about buying, stop thinking and start buying. Oh yes send me your loan.

That being said, the mortgage industry needs a tool to bring buyers into the markets who don’t qualify under traditional underwriting guidelines. If you read my Blog yesterday you will know that I think this is about 40% of the people who would be buyers. To restate a large % of people who would be great borrowers are shut out completely of any mortgage loan at all. This void is created because of poor credit, a credit system that is clearly set up to keep people from buying, and little or no money to put down.

FHA loans could be used to bring these buyers back into the market. There is current reform in congress in regards to FHA loans. It will be helpful but in no way will it serve those who are now left out. If the reform passes (my money says it won’t) it will help a few. It allows 100% loans to first time home buyers, it raises the loan amounts and gives lenders some ability to risk base price. That is where you charge more to mitigate more risk on different types of loan products.

The pure simple fact of the matter is that the way the industry has to qualify the 40% has to change. It can’t be based on credit or credit scores. Traditional Automated Underwriting Systems can’t be used and HUD has to think outside of the box and eliminate politics and special interests and do something to help those who are left out. That is the reason HUD and the FHA exists as I recall. There is a basic approach that will work. Tomorrow, the plan will be revealed. Pulitzer Prize people get your reading glasses out! Can you hardly wait?

More to come

Lonny