I'm seeing what seems to be a higher percentage of buyers getting denied for financing this year. Buyers are also seemingly having to jump through more and more hoops to get financed. Is it just me or have lender guidelines tightened significantly in the last year?
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Jim, I see it when we deal with the large institutions like Bank of America and Wells Fargo, they get as far as final underwriting and kill the deal. The regional lender who has a local office that I deal with, Trustmark National Bank, has closed every single deal that we have sent her and she gave a preapproval to. 100%, probably 300 or more buyers over the last 3 years for us. I try to send everyone to my preferred loan officer and many times the buyer wants to go with BofA or Wells only to end up back with my preferred lender to pull the deal out in the end.
Jeff, I see similar things happening too. The big boys just flat don't seem to care if they make loans or not and the community banks actually try. I'll go beyond the likes of just BAC/WFC/Chase/Citi though and include other "online" lenders too like USAA, Quicken Loans, etc. The hoops they throw up are absurd. The only thing I can figure is that the big boys are making so much money from taking zero percent money from the Fed and investing it in (supposedly) zero risk 30 year treasuries that they don't feel like they need to make "risky" mortgages. One problem I see is that buyers who start with BAC/WFC/Chase/Citi get so disillusioned with the process that by the time they get denied they are flat worn slick and don't even want to buy a home any more. Can't say that I blame them to some extent.