I represent the buyer of a nice home in Sequim, and this buyer is eminently qualified for a loan. The first challenge this buyer has is that a credit score of 650 is the new 750. In other words, if you needed a 650 normally to get a loan, now you need something much higher, like 750. Numerous clients who are very qualified for a loan, have their income verified, and jump through all the hoops are finding out that the loan underwriters have gotten so paranoid, they are delaying and killing perfectly legitimate transactions with perfectly legitimate buyers.
The second challenge also has to do with loan underwriters. They are rejecting good conservative appraisals completed by licensed and experienced appraisers who have excellent records. I have a seller who is being forced to pay for a second appraisal right now, even though the first appraisal met all standards for home appraisals, was done by a professional, and is a conservative appraisal with many true comparables at higher prices. In fact, the appraiser did a great job gathering many solid comps so the underwriter would have no problem with evidence. Guess what? Underwriters are going to have problems no matter what you submit right now. They are truly paranoid to the 10th degree, beyond rational.
A year or two ago this transaction would have been closed already, but now loan underwriters have gone to extremes. It’s one thing to make sure that fundamental requirements have been met in the loan application and verification process, and to make sure that all the “T’s” have been crossed and all the “I’s” dotted, but that’s not the problem now. Now loan underwriters are the problem. If you’re thinking about buying, the market has changed the way things are done. Plan for it.
I also think this is no longer a time when any Tom, Dick, or Jane real estate agent or loan representative is as good as any other. You wouldn’t take a raft down the Colorado rapids with someone who just learned to sit in a boat as your guide, would you? Then, if I may ask the rhetorical question, “Why hire a “someone” to help you negotiate the purchase of a house in a market full of traps for the unwary. You know I mean, a person (man or woman) who is inexperienced and who got his/her license because it sounded like an easy way to make money. It was in 2005, but not anymore. My recommendation is that you carefully do your due diligence when hiring a Realtor or a Loan Rep. It’s your money and your investment, and this is a dangerous market for buyers and sellers. After all, it doesn’t cost you another penney to hire the best, most experienced Realtor out there. Why not do it?
Last Updated on January 9, 2009 by Chuck Marunde