Purchasing A Home In 2012

With listed properties getting multiple offers, the need for an efficient
mortgage market is increasing.  Listing agents will tell you today that they
prefer all cash offers over financed offers.  One of the reasons for this is
that financed offers are more at risk of not closing escrow when compared to an
all cash offer.  The mortgage market is improving today but the need for a more
efficient mortgage market is increasing.  I assist individuals and families in
buying property in the San Francisco Bay Area and one of the problems that I see
in the mortgage market today is that borrowers that apply for residential loans
are being forced to "jump through hoops" that they should not have to jump
through.  Granted, wholesale lenders need to have strong underwriting guidelines
so that we do not experience the same fiasco that lead to the crash of the real
estate market and so that the wholesale lenders protect themselves against
litigation and other risks associated with lending.  With that said, borrowers
that have solid compensating factors should be given the benefit of the doubt in
regards to obtaining a loan.  Compensating factors can be any of the following:
Ratios, credit score, equity/down payment, assets, and time on the job.  If a
specific compensating factor is weak, that does not mean that a loan is not
warranted.  For example, if a borrower has a high debt ratio, lets say around
55%, but is strong in all other compensating factors, he/she should be able to
have access to funds to purchase a home.  The problem comes in when the
applicant is deficient on multiple compensating factors and as a result of
compounding risks, it will make sense not to grant the loan.


Earlier in the paragraph, I mentioned that individuals and families that
apply for home loans are being forced to "jump through hoops" that they should
not have too.  I had a client that had very strong compensating factors but the
lender wanted him to explain a credit inquiry that was done by Walmart last
year.  My client was not weak in any of the compensating factors.  There was no
reason that the lender needed to know about the credit inquiry that Walmart
made.  These are the types of loan conditions that aggravate home buyers today
and I'm already seeing that home loan applicants are becoming less cooperative
with the lenders in regards to providing certain documentation.  As a
professional in the Real Estate and Mortgage Industry, I work with underwriters
on a daily basis and I'm seeing that the underwriters are beginning to
understand that a slight shift is being made in the mortgage industry and they
are beginning to not be so stringent in regards to unnecessary documentation. 
This is good for the industry and for borrowers because more people will gain
confidence to purchase homes.  Granted, the mortgage industry has a history of
unscrupulous characters but the new licensing standards are removing these
unsavory characters.  All in all, the mortgage industry is still broken but I
think that it is beginning to become more efficient.  Please feel free to post
your thoughts.  Thanks!