We Are All In This Together

Ahhh. Friday on the eve of a 3 day weekend, AND the end of the month. This week I had 4 closings, which normally is a cakewalk for us. My record is 12 (back in 2003 when rates were so low!). But this week, I must say, the 4 closings were brutal. By that I mean tough to close. ALL had perfect borrowers, perfect credit, normal income…it was just the documentation of any special circumstances, this/that, the appraisal had the picture of exposed concrete we had to explain, the borrower got a bridge loan from employer and we needed a special letter of it being customary for their employees. The list goes on and on and on. I have to literally stop, breathe, and then remind myself that we are in trying times. Remind myself that my underwriters are on my team, they are not out to get me. They are asking me for these (silly?) things because they are being pounded, and I do mean pounded, by the investors that are buying these loans from us on the secondary market. You see, everyone is covering their tracks. From the investors, to the underwriters, down to us. Even the realtors. No one wants to get caught holding the smoking gun. This rationalization allows me to get through the day. Through the week . Through the very tough times. Wednesday I was living up to my nickname (Wiggie), and today, Friday, I am calm. All loans closed, all borrowers happy. That is a very good thing. So the next time your borrowers lender asks for ‘unreasonable’ things, stop a moment, take that breath, and trace backwards. Try to remember that we are all in this together, on the same team. Wading through the storm.

As for the FBI…they say they saw it coming. There was an article in this week’s Chronicle (Aug 26, Business) that disclosed top FBI officials saying they predicted this time of crisis resulting from loan fraud. But then they only had 100 agents for the entire country. Not enough man power. My take on this article, is that how could anyone have known? There are so many threads (like the Enron scandal…do we still really know where all the scams led?) The FBI only goes after the BIG guys. Losses of 1 mm or more. The large groups of fraud rings that are consciously engaging in fraud. What about the guy who is average, looking out for his family, and just wants to get in a home? His loan officer tells him he can state his income and be done with it. What about the borrowers that had a bankruptcy after losing their job? They have 4 kids and a dog, need a house because renting is not in the cards, so they take an ARM at 8.5% instead of fixed at 10.0% to save $100 a month so they can pay for school lunches? The FBI never could have gone after those people, or even imagined the number of people that would take advantage of the holes in our system that allowed for such things to happen.

Moving forward, I see good changes: Fixed rates mandatory for low down payment loans, tax/insurance escrow mandatory if the credit is adverse, full documentation of income in every case, stringent credit requirements, higher rates for those with lower credit scores. All of these changes are good. We do not realize it now, but it is changing the face of homeownership. Reaffirming the commitment and importance of owning a home. Ensuring your neighbors are as committed to homeownership as you are. If we just try to look past the details, and remind ourselves of the big picture, we can survive the day, and the year as well. Things will get better. Hang in there, and keep smiling. Godspeed to you all, and have a safe holiday weekend!