Orlando Real Estate

It's Time to Start Loosening Lending

June 4th, 2012 12:26 PM by David W. Welch

I am sure there are some "experts" out there who would disagree with me, but unfortunately for you - you're wrong. When the market was out of control, lending should have been tightened up to reign in the market. Now, the big banks, Freddie and Fannie are so worried about not screwing up again they just don't seem to want to loan money. I am not talking about making crazy loans here. Hardly a week goes by that I do not hear a story about a buyer with good credit and 20% or more down payment getting shot down by some lending guideline.

One of the favorite tricks is for the loan underwriter to send the appraisal back as unacceptable and ask for additional comparable sales. They even go so far as to describe the type of sale they want to see used in the appraisal. A few years ago, Congress in their infinite wisdom screwed up the whole appraisal system, but thankfully lenders figured it out and got it working again. Now, some are using their influence again to effect appraisals, but in the other direction. Tight lending practices seem to have made underwriters afraid to approval a loan package. I cannot speak for other markets, but ours has turned the corner.

Yes, we still have thousands of distressed properties that will coming to market, but we also have a sever shortage of homes for sale. If every distressed property came on the market at the same time, I doubt it would make a ripple. I wrote one offer last week on a property with 17 other offers on it. Can you say "economics?" It is all about supply and demand, and our supply is down while demand remains high. The problem with demand is that wanting to buy is not the same as being able to buy. Loosen up lending, and watch things take off.

David Welch Real Estate Optimist, Orlando Real EstateSearch for Homes

Posted in:General
Posted by David W. Welch on June 4th, 2012 12:26 PM


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