[Just released excerpts from the National Association of Realtors]
Lawrence Yun, Chief Economist for NAR says there would be enormous benefits to the U.S. economy…….if mortgage lending conditions returned to a more favorable posture with consumers.
“Sensible lending standards would permit 500,000 – 700,000 additional sales in the upcoming 2013 year” Yun said. The economic activity created through these additional home sales, could add 250,000 to 350,000 jobs in related trades and services almost immediately, and with minimal cost impact.”
Most Realtors, and some high quality lenders like the one shown to the right, have widespread concern over unreasonably tight credit conditions for residential mortgages. Realtors also are concerned that they may be wasting their time showing homes to a buyer needing financing, who ultimately wont be able to get a mortgage on the home they want to purchase. As gas is back in the almost $4,00 range again, some Realtors are choosing to work with cash buyers only! Other Realtors who list property “For Sale” are advising their sellers to place greater weight on cash offers……….even if they are less than an offer with a finance contingency.
Mortgage Brokers are frustrated at the new guidelines…more oversight…2nd and 3rd underwriting requirements…additional buyer cash required, that is being imposed on their buyer clients. Time spent on taking the application…verifying income and employment…credit report review…….endless stream of paperwork……has created major headaches for these brokers to even survive in their business.
Even though profits in the financial industry have climbed back strongly to pre-recession levels, lending standards still remain unreasonably tight. While the housing market over-corrected…..so has the lending guidelines and restrictions. What seems odd, is that mortgage defaults over the last 12 month’s has been less than 0.2% compared to the 3.0% of the market peak. We need sound underwriting standards, not unreasonable ones!
Mr. Yun urges Freddie and Fannie to work to ease this bottle neck and return to sound lending to help the engine of this economy…….housing……get the country moving at a faster pace!.