Can You Have Your Cake And Eat It Too?

In this article on www.cnbc.com (http://www.cnbc.com/id/23520031), it was reported that Countrywide's CEO Angelo Mozilo told a congressional panel that the tightening of mortgage guidelines has gone to far. Mozilo was quoted as saying "For the market to recover, underwriting guidelines need to strike a better balance between providing borrowers with access to loans and lenders and investors with the assurance that these loans will be repaid." That's a great point but who is going to make the first move?

Everyday the challenge for us in the mortgage business is to find something that works for our clients. And everyday it gets harder and harder. We have to remember guidelines from Fannie Mae and Freddie Mac as well as each individual lender we work with. What works today may not work tomorrow. What you told your client last week may not be true now. And forget about constant changing rates. You think gas prices are crazy? Try quoting a 30 year fixed rate to someone only to find that rate moved .50% for the worse. That's a phone call you don't want to make. Now, let's talk appraisals.....

Mr. Mozilo made a real good point in his speech before the congressional panel. "I also want to strongly suggest that traditional guidelines be reexamined relative to the appraised value of a home versus the outstanding mortgage so that current borrowers can refinance at lower interest rates," he said. Now that makes sense. It so sad to see people lose their houses because the values nosedived and now no lender wants to refinance them because these poor people are "upside down" (owning more than the market value of their house).

It's not their fault that values have gone in the tank. Nobody had a problem lending money to them to buy the house but now these same people are a "bad investment". The homeowners that are "upside down" should be able to refinance like anyone else.

If these folks don't get help, "upside down" will just be the first move in this real estate tumble.

If you have any comments on this article, I would love to hear what you have to say! Feel free to comment below.

Thanks for reading!

Dan Tenchall
Great Lakes Mortgage Funding

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