Were you denied a mortgage and/or put through the ringer as a potential borrower? The drag on the housing recovery as a result of the uncertainty and insanity of current mortgage underwriting cannot be overstated. If the current administration wanted to do one thing to jump start the housing recovery (and by extension the US economy), it would provide clarity to the rules and regulations going forward for Fannie Mae and Freddie Mac. Without clarity, lenders are terrified they will be forced to buy back a non-performing loan for some obscure reason. Private mortgage-backed security investors also need clarity before they will be willing to return to a market that has shrunk by some 95% from its peak.
I frequently work with buyers who have the capacity to stroke a check for cash for the property they are attempting to purchase. These are high net worth, high credit score individuals who should be able to obtain swift financing approval, but who instead are being subjected to overzealous scrutiny and supporting documentation requests that make them wish they had never even thought about purchasing real estate. Why don’t they stroke a check for cash? One of the reasons they are well off financial is because they are savvy about financial matters and understand the extraordinary value of obtaining 30 year fixed rate loan <5.0%. In fact, for many of these buyers, availability of the mortgage money is just as important as the real estate they want to purchase.
If you know someone in Washington who can influence Fannie Mae/Freddie Mac policy (and who would love to be known as the architect of the US housing sector recovery), please tell them to take action. We don’t need radical change to prevent another mortgage meltdown like we saw in 2007; we do need a little common sense.
More good reading: Outlook for Mortgage Market