House Hunter: Mortgage Broker Madness
“I have lots of good friends who have walked away from the business. Got to be too hard.”
Miners? Bomb defusers? NFL quarterbacks?
Nope. Mortgage brokers. The speaker was himself a Santa Barbara mortgage broker, who requested anonymity.
Like everyone who’s not stuck in a mine knows, the easy-money days leading up to 2008 are long gone. In their wake are higher hurdles and tighter restrictions aimed at preventing a return of the meltdown.
That was certainly the case for my friends who recently bought a house in San Roque. They had great numbers and sought a loan from the same bank with whom they’d had a mortgage for 30 years, never missing a payment. How’d it go? “They put us through the wringer,” they said.
“How Difficult Is It To Get A Mortgage Nowadays?” says a big headline on the Financial Samurai blog of Sam Dogen of San Francisco. “Brutally Difficult And Extremely Painful,” he answers his own question. He then goes through the agonies he faced, despite being a retired Wall Streeter with a healthy income and assets, healthy deferred income, a spotless record of past mortgage payments, etc. In the midst of all that comes this wounded cry:“SHOOT ME NOW!!!!”
Ask the question a few hours south of Sam, here in Santa Barbara, and you might get a different response.
Tougher than ever to get a mortgage?
“Not necessarily,” said Lori Murray, vice president and mortgage lending officer at American Riviera Bank. “We’re doing a lot of loans — great volume.” It can be “more challenging” these days for those who write off significant amounts of income, but for those who show steady paychecks, “the requirements aren’t a lot tougher than pre-2008.”
Murray created the mortgage department at American Riviera three and a half years ago, well after the 2008 crunch, but she’s been in the industry for 25 years. “I’ve been through the ups and downs,” she said. “When I started, the interest rate was 19 percent. Today it’s a lot like making loans in the 1990s and early 2000s.”
What’s new and tricky are the TILA-RESPA Integrated Disclosure (TRID) rules and forms, prompted by the 2010 Dodd-Frank financial law. TRID went into effect on October 3 with a goal of simplifying the mortgage process, but it is causing confusion. “It’s a whole new can of worms,” said Murray. “There will be some delays until the industry gets used to it.”
So we have a split so far: one side in mortgage hell, the other not so much. To break the tie, I called in Harlan Green, owner/broker of Bankers Pacific Mortgage in Santa Barbara and, yes, a money/mortgage columnist.
“Not that bad,” was his verdict. Yes, 2008’s credit bubble burst did create “a lot more rules and regs, what you’d call an overreaction to a horrible event.” So now borrowers have to have more ducks in nice, neat rows. But overall, “A plain vanilla loan should be easy.”
Even so, lenders can be picky in the new era. “Some want to cherry-pick — 720 or better on credit score,” Green said. “But it can go down to 620 for FHA, and they’re really cheap, with a 3.25 rebate — large enough to pay for mortgage insurance.”
So the decision leans toward the sunnier side of the mortgage street, at least here in Santa Barbara, except for my friends up in paragraph five. If in doubt, visit a mortgage broker. “It’s still the basic stuff: Verify income, credit, and assets,” Green said. “If it looks good, great — on to the next.”
