There is so much fuss about the current industry shake-ups and departures in the subprime mortgage market… Every day I hear people talking about the great crisis we are going through. It is a crisis; but it’s also the home loan going back to the home loan, as we once knew it.

Someone once said that the only constant thing in our industry is “change,” and yes, we’re seeing it a lot. Change is good.

I’ll probably date this article, but for those of us who were selling mortgages before the internet was a factor, before credit scoring, and before subprime loans, we all survived. That is, those of us who worked.

There were times when interest rates were 18-20% (and that was before my time), but I was around when interest rates were 10%, I was buying a house at the time, and I was delighted to be there. below 10.00. get 9.50% — 30 years fixed conforming.

The market and industry have been so good for so long that many loan originators don’t know:

What is it like to structure a file for the borrower to qualify.

How to analyze the tax returns of self-employed borrowers so that they can obtain the complete document.

How to actually work with FHA/VA programs, state bond programs.

These things from the past were solid and stable business practices.

We had no fake loans (stated self-employment programs let alone 100% declared W2 wage earner programs). We had some indicated programs available but with lower LTVs. We had no 100% relationship programs, 100% declared N/O/O programs. We had programs that our borrowers had to fit into or they didn’t qualify for the loan. If their ratio was too high, they had to pay off part of their debt or we qualified them on an arm product.

We still have:

Amortization at 40 and 50 years.

Products of interest only.

97% of complete document purchases.

Down Payment Assistance Programs

FHA Loans with 97% Purchase

VA is still 100%.

Reverse mortgages.

We have to focus on what we have available for our borrowers.

I think the same can be said for the slower real estate markets. Some markets were unbelievably expensive and sooner or later the rug would fall out from under them. Well, the time is now. A house can only appreciate 50 – 100 -150% for so long. Many rode the wave and prospered, now the market is fighting back.

The reality is that some market areas are looking for offers on houses that come in at 25-20% below list price. The dollar has to stop somewhere and yes it has slowed down. The reality check has arrived. Whether the glass is half full or half empty depends on how you look at it. Are they really declining in home values ​​or are they really priced as they should have been? It depends on whose eyes you are looking through, the sellers or the buyers. Real estate sales are all about what the market will show, what someone is willing to pay for similar properties. I learned that way. I don’t think this appreciation factor should be blamed on appraisers. They did not inflate the property, the buyers and sellers did. Appraisers used available offsets to determine value.

Did the real estate agents cause this roller coaster effect, not really; again it was the moment of all things. Realtors couldn’t have listed properties over inflating them unless buyers lined up to buy at these higher prices and appraisers could compensate them.

In my opinion, home prices will settle in most areas, in some areas some people will experience property losses, but across the US as a country it will level off shortly.

It wasn’t the loan officers that created the potential and easy-to-default buyers, it was the media, the government, the lenders, and all the ridiculous loan programs available to many truly unqualified homebuyers. It was so easy to put someone in a home that didn’t qualify. Just use a 100% stated program… some of these programs allowed for low credit issues, late payments, judgments and follies.

We as loan officers were simply doing our part in pre-qualifying borrowers. We can’t make credit decisions, we can’t tell someone they don’t qualify for a loan, we have to present these loans and process them. If they qualify for a program, it’s our job to put them on it. Regardless of whether we believe they can make these payments within 3 months. So we did our job, up to a point.

One of the things I learned from the IMBA teacher training was that a set loan was only supposed to be used when the borrowers actually made enough money but couldn’t show it on paper, maybe they had a lot of write offs on there tax returns. , maybe they had a second job paying cash… whatever the case, those were the ones that were supposed to be stated loans. Personally, I think the stated loans took a lot of the headache and stress out of the loan officer, processor, and underwriter when analyzing self-employed tax returns. If the borrower did not fit this scenario, he was not supposed to be in a relationship and show no income and possibly pay a slightly higher rate.

I’ll ask the question: “How many loan officers knew this, understood it, and even cared to use it?” My guess is probably 99.9% was stated.

I still think we have a lot of programs available to us. It is up to us to learn how to use them correctly. It’s up to us to go back to networking, the phones don’t ring. It’s time to join associations, make presentations, call builders, accountants, lawyers and yes, even real estate agents! It’s time to reinvent lending as we knew it in the past.

My wish for you… is that it be the best year you’ve ever had. Work hard, but work smart.