by Craig
Yea, yea I know…. If you read every email about lending changes you would never get any real work done…
You should know about these changes.
You know banks are tightening up on everything. You may also know that MI (mortgage insurance) companies have tightened up on everything and they have their own rules to meet in addition to the banks rules.
You may not know much about Warehouse lines. That is where we get the money to fund the loans. Our company last month April closed 65 MILLION dollars of loans. Our warehouse lines funded them and then they are sold to the investor:Chase, Wells, Citi, B of A, etc… and the 65 million comes back on the lines in the next few weeks and we do it all over again.
Even though they may only have their money out 2 weeks -- and the loan gets bought by Chase or some other bank -- they are making their own rules. So the "warehouse line" is now telling us that in order for us to use “their” money lines we can not have loans over a certain debt ratio… they have many other rules as well.
What if FHA will ensure a loan and Countrywide will buy it - - - too bad. The "warehouse line" says no.
So new ratios for all FHA loans are 45% - don’t bother writing that down as it will change in a few weeks. So if we run a loan through the FHA automated system and it has a 46% debt ratio and it meets all of FHA’s guidelines and gets approved - that does not mean that we can fund it. We have to get past the warehouse line, the MI company, FHA, and the investor who buys the loan. All 4 have their own rules. And they keep changing frequently.
If the borrower was approved prior to 5-1-09 then we can still close a loan with a higher debt ratio but that should phase out soon. Way more hoops to jump through than even a few months ago -- and we thought that was crazy.
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