I have to continue to remind my subscribers that the opinions expressed on my blog are my own and based on observations of what is happening presently in the entire lending industry.

I remember not too long ago when someone buying a home putting 20% down with good income and high credit scores would easily qualify for a home loan.  Banks did not pay too much attention to how the income was documented.  The reasoning behind this was based on the statistical high probability that such borrowers would not default on their loan.

Due to the economic environment causing many people to lose their jobs, many homeowners who purchased homes with great income and credit  have lost their homes. So what have banks done?

They have gone to the opposite extreme and are now requiring, in my opinion, excessive documentation.  Income and down payment adequately documented from a common sense perspective is not enough.  Underwriters must go way beyond what is reasonable and now must overdocument each loan.  I don’t blame underwriters, but rather the system.  The underwriters are only doing their jobs.

So loans that would normally sail through processing are being bogged down causing many escrows to close late. …more in future blogs.