In obtaining a home mortgage, it was never a question of if I qualify
but when. With good credit erasing bad credit, in time, all past
"sins" are gone. The only other variable was income vs. debt.
Well, just recently I have added a third consideration which is where.
Where you go to obtain financing does make a difference.
Two cases in the past few months have made me a believer.
First, a buyer was told he would have to wait 6 months, improve
his credit score, and then
reapply. Second, the ultimate fear, the "Birmingham" underwriter
turned down the buyer's loan the day of closing. In both cases a
different mortgage company was able to provide financing. In the
last case the closing only changed by one day! I have asked LESLIE
JACKSON the branch manager of Regions Mortgage Millbrook
(285-0250) and
TAMMY MOON TURNER
the branch manager of Country Wide Mortgage Montgomery (213-0997) to
provide us with their insights in mortgage lending.
Leslie, how are you able to make a loan happen when
another company cannot? |
Jim, Regions Mortgage Inc. is often able to do loans that other
lenders cannot because of the diverse investor base from which we
obtain
the funds. Regions has the ability to lend from the deposit base
of Regions Bank, from bond funds raised by the Alabama Housing Finance
Authority, as well as funds raised directly by Regions Mortgage through
the capital bond markets in Chicago. In addition we also have
exclusive
relationships with multiple private investors who are often willing to
make exceptions to traditional guidelines as well as income ratios and
credit history.
All mortgage banking companies have access to investors who require
conformance to the standard documentation and underwriting guidelines.
It is Region's size and exclusive relationship with investors who
allow exceptions to these guidelines that makes the difference. Since
Regions
Mortgage Inc. almost always services the loan for the investors, our
customers
only have to deal with Regions when it comes to making their payments
so
it really doesn't matter to the customer who the investor is. The
important
thing to the customer is that they get the loan they need at a
competitive
rate
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| Can you mention some of your program? |
Sure, some of our most popular loan programs include:
1. 100% financing - no money down. We have at least 3
different 100% programs.
2. Construction/permanent financing all rolled into one loan.
3. Stated income and low or no documentation financing in cases
where proving income or assets may be difficult.
Of course we also do all the standard FHA, VA and 30 year fixed rate
conventional programs which have all been popular this year with
interest rates as low as they have been. Region's size makes all
this possible, but it also gives each local loan originator the
ability, through technology to submit the loan for approval while the
customer is in the office. The customer has access to all the
loan programs from which they can choose immediately at application.
This way the loan originator in the local
branch can spend time explaining only those programs for which the
applicant
can be approved.
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Leslie, please explain the credit scoring process as it exists
now (September 2001).
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I have often compared mortgage loan underwriting to making a stool
stand up. A four-legged stool will stand as will a three-legged
stool.
When you get to two legs, it is impossible to make the stool
stand
up. The four legs of the mortgage stool are:
1. Capacity - Does the applicant have the income that
would make them able to repay the loan?
2. Cash - Does the applicant have adequate savings to pay
the funds required at closing plus the reserves after closing to cover
any emergencies?
3. Collateral - If something happened to the borrower,
could the lender recover the loan through the sale of the property?
4. Credit - Has the borrower shown proper regard for
the repayment of their obligations in the past?
Credit scoring only deals with one leg of the stool and as such is not
the only criterion used in making the underwriting decision. As
one fourth of the decision process, however, it is certainly an
important part of the decision process. Some factors that effect
a customers credit score include:
1. How promptly has the borrower repaid credit obligations in
the past?
2. If there have been delinquencies how recent were they and on
how many accounts?
3. How much credit does the consumer have, and how recently
was it opened?
4. What types of accounts does the consumer have such as
revolving charge cards or installment loans?
5. What is the outstanding balance as it relates to the credit
limit?
6. How many inquiries to obtain new credit have there been
recently?
7. Are there any public records such as bankruptcy, foreclosure,
or judgments?
8. Have previous creditors had to file for collection or charge
off any previous accounts?
All of these factors are not necessarily equally weighted when
producing the consumers credit score and there are some wonderful
brochures I can provide that explain the scoring system in more detail.
Let me close by listing some factors that do not go into the credit
score, which makes it the most objective way to look at credit we have
ever had. It does not include how much you make, where
you work, age, gender, race, national origin, religion, marital status,
or any other factors that have nothing to do with how you have managed
your credit in the past. Objectivity is maintained because
everyone is scored based on the same factors.
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Thanks Leslie, your insight and time are greatly appreciated.
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