Is the Mortgage Business Bad Everywhere?

By M Donald Davis

State Of The Mortgage Indusry

Despite what is written and broadcast about the mortgage "meltdown" and credit crisis I believe people need to understand the real affects of the current mortgage environment. The news in general, it seems, needs to be sensationalized to get peoples attention. If you believe the reports you would think that there are no more mortgages available. And while some of the housing markets in the country are in very dire straits, not the same for the Puget Sound region and Snohomish County in particular. There are still loans available to virtually every one for all credit scores. We have experienced a slowdown but no major depreciation has occurred. In fact a recent article in the Snohomish County Business Journal cited an array of reasons why we are in a strong economy and will continue to be.

First of all mortgage lenders are still in business and in the business of lending for your mortgage. There are still loans for 100% of the property value. And people can still get a mortgage with less than perfect credit. Now with that said, the lenders are a lot more careful today as to the criteria (guidelines) of lending. Typically the lender is going to look for reserves. This is liquid money that is usually in some type of savings account, IRA, 401K, stocks, bond, cash value life insurance and such.

With enough liquid reserves and a good credit score the borrower has much more flexibility in the loan products available, including the amount up to and in some cases over the value of the property financed. Dealing with a reputable and knowledgeable loan consultant can go miles in planning and achieving the financing desired.

Yes, lenders have gone out of business and some are in trouble. In some areas nationally, where the lenders have loaned money, the default rate is causing distress among lenders. These were generally over inflated home values to start with that couldn't sustain the momentum.
But the investors also know that some of the safest money is still in mortgage backed securities and are still very willing to lend. Fannie Mae recently adjusted the rate for loans over 70% of home value and with credit scores under 680. The borrower will have to pay a slightly rate to obtain that loan but it is still there.

A competent mortgage professional should be able to help a borrower increase their scores if they understand how the credit scoring system works.

Most of the lenders are still offering the same type of loan products that they did last year and the years before. They simply have increased the credit score and reserve amounts to attract the lower risk borrowers. Once again, a competent mortgage professional should be able to offer sound and ethical advice as to how to educate a borrower on managing their credit scores. In my business, there are some cases that we need to work with a potential borrower for a couple of extra months to get their "house" in order, save some extra money and increase credit scores to qualify at lower rates and better terms.

The state of the Mortgage industry is strong, so next time you see or hear the news, check to see if they are talking about Snohomish County or if they are citing stories from California, Florida or somewhere else in the country. If they are, then basically it really doesn't matter much to us. Just be thankful that we live where we live and if you own a home or want to, that there are still great mortgage loans available. You may just need to learn a little more.

Don Davis can be reached at 360-652-9994 or visit his web site at http://www.HTLNW.com for other contact information. Don specializes in residential and commercial lending mostly in and around Snohomish County, North King County, Skagit county and generally in the state of Washington. Don has spoken at numerous workshops and events regarding credit scoring and related topics and has helped many people substantially raise their individual credit rating. If you want to maintain a high credit score or wish to increase and maintain a high score, contact Don to schedule a meeting today.

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