We can not recall the last time we’ve heard so many in our industry and outside complain about the level of difficulty in getting loans to the settlement table be they a purchase or refi. The only other time that comes to mind is 1994, right after the initial refi boom of ’92 and ’93.
Now, as then, rates have risen to new highs after a prolonged period of very favorable and accommodating money costs. The difference is the many types of exotic, high loan-to-value (LTV) loans that were done over the past several years. Not only were these loans closed with very little equity but they were done with very little if any income verification and too many with the middle credit scores below 600. And as housing values are correcting this becomes a recipe for some individual disasters.
This combination of events has lenders of all shapes and sizes “nervous”. Loans are being scrutinized more closely, underwriting and loan guidelines are changing daily and loans that may have sailed through before are now meeting resistance.
Now more than ever you need a loan counselor who understands the changes and how to respond to them. You must demand a counselor who has seen these types of market conditions before. Someone who knows which lender is sensitive or not to this or that borrower situation. As a borrower you need someone who can get your loan(s) closed on time with the least frustration. Because if your loan doesn’t close, it doesn’t matter what price you were quoted.