Are Banks Still Lending?

[Tom Kazanski]

Originally Posted by kingstu

Unemployment (during recession)

Current - low 6% range
2002 - low 6% range
1992 - high 7% range
1982 - high 10% range

Seems pretty normal at this point...

I would like to see this in comparison to the amount of government aid. I could be wrong, but I would bet there is a correlation. I also know there has been an influx in illegal immigration.

[kingstu]

Originally Posted by Tom Kazanski

Sounds like your friends need to lower their standards and work their way up after getting an entry level position.

The people across the street should have done better financial planning and not bought a house they couldn't afford in the event of an economic slowdown.

Why is a guy with a degree working at a temp agency? This one needs to raise his standards.

Good post…when I lose my job…I downsize…cut out cable…lower my cell phone plan…go out to dinner less…pretty standard stuff.

Also, temp agencies are great when you lose a job...I've used them several times over the past 20 years...you take a little pay cut...work for a few months until you find something better.

[kingstu]

Originally Posted by Tom Kazanski

I would like to see this in comparison to the amount of government aid. I could be wrong, but I would bet there is a correlation. I also know there has been an influx in illegal immigration.

When unemployment benefits get longer...people are out of work longer...go figure.

[MODE ROGUE]

I own a mortgage & real estate company. I appreciate your chart(s) but I can honestly tell you, closing a residential loan today is about as much fun as going to a proctologist.

I’m only averaging about 2 closings a month and have a pipeline of 20+ pending files. I work exclusively with developers which is why I have a “healthy” batch of business. I can’t close shit. Underwriting guidelines are now bordering on absurd and I am losing legitimately qualified prospects (decent credit/liquid) because of this rigmarole. Just this past week, Citibank eliminated most of its wholesale & correspondent lending sales division. 7,500 lenders, out of their 8,500 broker network, were dropped (including me).

The writing’s on the wall. If other banks start following suit, I’m out of business. As a member of several local business networking groups, I can assure you everyone here is going through the exact same dilemma. Real estate demand is actually decent. Much more robust than people know. The problem is that buyers are no longer getting approved for financing and the vicious cycle takes it course.

[LavrentiBeria]

Originally Posted by MODE ROGUE

Underwriting guidelines are now bordering on absurd and I am losing legitimately qualified prospects (decent credit/liquid) because of this rigmarole. .

Can you be specific? I heard it is 15% down + credit score > 700. That's not absurd, but reasonable.

[kingstu]

Originally Posted by MODE ROGUE

If other banks start following suit, I’m out of business.

I’m sorry to hear this. With home prices doubling during the past few years…there’s only one way they can go. If you were a bank and home prices were still falling…how anxious would you be to lend on current appraisals?

[kingstu]

Originally Posted by LavrentiBeria

Can you be specific? I heard it is 15% down + credit score > 700. That's not absurd, but reasonable.

IMHO, this seems pretty reasonable to me. Your description prefectly describes me and I can get a loan on any propery my income can support.

If you have:

FICO>700
Down Payment>10%
Pre Tax Income>3x monthly payment
Job> 3 years

Almost any bank in the country will give you a loan and be happy to do it.

[Tom Kazanski]

Originally Posted by MODE ROGUE

I own a mortgage & real estate company. I appreciate your chart(s) but I can honestly tell you, closing a residential loan today is about as much fun as going to a proctologist.

I’m only averaging about 2 closings a month and have a pipeline of 20+ pending files. I work exclusively with developers which is why I have a “healthy” batch of business. I can’t close shit. Underwriting guidelines are now bordering on absurd and I am losing legitimately qualified prospects (decent credit/liquid) because of this rigmarole. Just this past week, Citibank eliminated most of its wholesale & correspondent lending sales division. 7,500 lenders, out of their 8,500 broker network, were dropped (including me).

The writing’s on the wall. If other banks start following suit, I’m out of business. As a member of several local business networking groups, I can assure you everyone here is going through the exact same dilemma. Real estate demand is actually decent. Much more robust than people know. The problem is that buyers are no longer getting approved for financing and the vicious cycle takes it course.

That sucks man, I hate to hear that.

Let me ask you this though, do you think maybe we are getting back to where it should be as opposed to the outrageously loose criteria that congress pushed on banks over the past 6 or so years?

[Tom Kazanski]

Originally Posted by kingstu

IMHO, this seems pretty reasonable to me. Your description prefectly describes me and I can get a loan on any propery my income can support.

If you have:

FICO>700
Down Payment>10%
Pre Tax Income>3x monthly payment
Job> 3 years

Almost any bank in the country will give you a loan and be happy to do it.

IMO, you should not be buying a house otherwise. And with my wife being a real estate agent, this directly effects me.

[kingstu]

Originally Posted by Tom Kazanski

Let me ask you this though, do you think maybe we are getting back to where it should be as opposed to the outrageously loose criteria that congress pushed on banks over the past 6 or so years?

IMO, this is the most likley scenario. When you have this:

FICO = 600+
Income = ?
Job = ?
Down Payment = $0
Terms = Interest Only ARM

The only way for underwriting guidelines to go is more stringent.