“A Very Different World Today”

David H. Stevens, President and CEO Mortgage Bankers Association

“It’s about an inefficient, and at times contradictory, system with poorly crafted regulations that has gone well beyond consumer protection and now causes credit-worthy borrowers to be rejected from home financing. Some borrowers today with FICO scores of 650 and above and who are willing to put down 10%-15% still cannot get a loan. Because the rules that govern lenders today are unclear making the risk of litigation that much higher, qualified borrowers like these are being edged out of the system. Lenders protect themselves by only approving loans to those with perfect credit.

Don’t just take my word for it. The following is a direct quote from a commenter on one of my more recent LinkedIn blog posts:

“The process has indeed been miserable, mostly because of silly regulations. The fact that I am self employed has been a further challenge even though I make substantially more than I used to at my old job. The most ridiculous part is that through a strange regulation they insisted that we were not qualified for a conventional mortgage with a much lower monthly payment even though we had the cash to put down, but they had no problem qualifying us for the government backed FHA [loan] for nearly double the monthly payment and very little down. The FHA [loan] would have put us in a serious hole financially as opposed to the conventional mortgage.”

Policy makers should take the appropriate steps to clear up this uncertainty and strike the right balance in the real estate finance system. We need a system where homeownership is a doorway to opportunity and borrowers can once again feel safe, confident and secure in their loans, but also a system that thrives in an environment that encourages a competitive, responsible marketplace so business can grow.”