Lenders aren't lending?　 Let me assure you loud and clear: mortgage lenders ARE indeed lending, homebuyers are buying homes, and homeowners are truly refinancing.　 There is money to lend and mortgage bankers are happy to loan it out to qualified buyers.　 (Stay tuned for the qualified buyers discussion)

 I chuckled when I saw this question come across my email this week - not because it was a silly question, but because of the misperception that continues to circulate.　 It made me chuckle because lending is exactly what lenders are in the business of doing: loaning money to qualified buyers so they can purchase or refinance their home.　 We only earn a living when loans close, so we are truly motivated to find safe ways to loan money and close loans.

 But perhaps because lenders are dotting their "I's" and crossing their "t's" more right now than they did 5 years ago, the (incorrect) conclusion that so many have come to is that mortgage companies are not lending right now. But also, perhaps, because borrowers grew accustomed to such ease of proving their creditworthiness that it feels like a tightening to them.　 I liken this phase to the growing pains consumers felt when the government began to tell us that seat belts in automobiles were going to be required.　 Riding in a car when I was 7 years old did not require a seat belt.　 But when I put my own children in the car many years later, the safety seats and belts had grown to a intense system of buckles and straps.　 This is similar to the system of underwriting today - more steps to ensure safety in lending.

 Let's also acknowledge that it requires more documentation today to get a loan approved than it took 5 years ago.　 Not too long ago, a borrower may have been asked only to provide a single paystub and maintain a decent credit score.　 Today, the lender and borrower go to much greater lengths to get that same loan approved.　 For example, borrowers today are asked to provide documentation for all non-payroll deposits in to their bank account.　 A decent credit score a few years ago would have been in the mid 600's.　 Today, the lender would prefer to see those scores in the 700's.　 When it comes to documenting how much income an applicant makes, the term, "declining income" has become a factor in many underwriting decisions. 　

 What we are telling our clients right now is that lenders are indeed approving loans.　 We want to loan money so that we can earn a living.　 After all, that is what we are in the business to do.　 Just keep in mind that we are all working a bit more diligently today than 12 months ago to get that same mortgage loan approved.　 It can be done, and you can get the loan you want to either purchase or refinance your home, we just need to realize that we will need to provide more documentation today than we did 5 years ago.

 Don't forget that there is a positive outcome to shoring up underwriting requirements, by the way.　 Think of it - by ensuring a higher quality loan application, as an industry we are taking greater care to ensure that mortgage loans are safer to more people.　 By tightening the requirements a bit, perhaps we will find fewer homeowners facing the danger of losing their home to a mortgage they couldn't truly maintain over the long run.　 We are keeping the cars safer, so to speak.　 We'd rather be sure that we help borrowers maintain homeownership successfully for many years to come.

Christine Jensen, CMPS ®