By and Large, people who buy homes require a mortgage to do so. Right now, the mortgage business is going through a slack time, so I went to visit a lender to find out what they actually do, why things take so long, and why they are continually asking for more information.
I don't know that I got satisfactory answers to my questions, but I did get some answers. These answers make sense from the lender's perspective, but some of them leave common sense behind.
The first thing you have to realize is that lenders have come "under the microscope" lately in terms of governmental regulation and public opinion. The combination of these two things makes the creation of legislation "for the public good" far too tempting for congress to "do something" about. In this case, the road to lender purgatory was paved with good intentions.
According to the Consumer Protection Financial Bureau, legislation enacted this year "generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for “qualified mortgages.”"
The key phrase in this, and a recurring theme across the legislation, is "ability to repay". It used to be that ability to repay was left to the lender. If a person was a risky prospect to make a loan to, and the lender did it anyway, then the lender was left with the problems if the buyer couldn't repay the loan. That is no longer the case! It is rare now for a lender to keep the loan that they create. This will be the topic of an entire blog later in the series.
What "ability to repay" translates to in the real world, is agonizingly minute oversight of lenders that requires them to go over a file - every page - at least 5 times in their process:
1) loan officer reviews docs as they come in
2) loan officer assistant reviews docs as they are placed in file
3) loan processor reviews docs to prepare them for underwriter
4) Underwriter reviews docs
5) Compliance department reviews doc
With all the touching of documents - by the way, these are physical documents - it is no wonder how long it takes to do a loan. Next up - Reaping of Documents!
#RealEstate #Avondale , #Goodyear , #Buckeye , #Glendale, #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman
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