I always hear how people miss the good old days. I am not sure I do. I prefer progress. But lately, the mortgage industry has been regressing, and I would say that we have not been making progress; we have actually been going backwards. It seems the mortgage process has swung from too easy, to too strict, and now to downright ludicrous. There is nothing that Fannie Mae wants undocumented that is related to a mortgage borrower’s finances, and I mean that literally. So I understand when someone says to me the following, “It wasn’t this hard 4 years ago when we last did this!” Of course they are inferring that only four years ago it was easier to get a mortgage, so why is it so much harder now only 4 years later.
But guess what has happened in the last 4 years? There has even been an enormous amount of change in the last 4 months, let alone the last 4 years! We have seen in the last 4 years numerous major institutions that either failed, were acquired under duress, or were subject to government takeover. These included:
-Fannie Mae and Freddie Mac were taken over by the Feds in bankruptcy receivership.
-MetLife pulled out of the mortgage business abruptly.
So when a client wonders why it is so much harder now than it was only a few years ago, I wonder what they are wondering about. It is harder now than 3 months ago! And the amount of new mortgage rules that have come on the books in the last 3 weeks alone would make your hair stand on end. The amount of foreclosures, short sales and late payments have been staggering for the industry, and are now getting back down nearer to normal levels. When an industry loosens their standards as much as the mortgage industry did, and the losses increase to apocalyptic proportions, you have to clamp down. So if you are a qualified mortgage consumer in 2012, now you know why things are so hard. You are paying for the sins of those that have gone before you.
So forget the good old days, those are long gone, and won’t be back for a very, very long time; if ever in our lifetime. It is time to accept that a mortgage borrower is going to have to document every financial bit of data no matter how small that exists in their lives and there is no escaping it.