Smalltownbanker

Housing and Banking Set to Lead Another Economic Wave Lower

Hardwood Floors needs a new banker and the attorney should go fishing for clients somewhere else. As a community banker I can tell you that we have more money to lend than we have opportunities to lend it. Deposits are up and we have excess lending capacity but can't find enough good deals to make.

Regarding mortgages, the area of the bank which I happen to manage, we have no more problems today approving well qualified buyers than we did 3 years ago. The margninal credit borrower is now hard to get financing for but it should be harder than it once was. The self employed person who thinks self employment is a method of avoiding income taxes can't get a loan. Honest self employed people who report their earnings and pay their taxes are getting loans from me every day.

One group who is no longer eligible for a mortgage is the individual with no credit score. My Dad's last loan was taken out 2 years before I was born, or about 52 years ago. Today if he wanted it he would not be able to get a mortgage, at least not an agency mortgage sold into the secondary market. That is unfortunate.

Otherwise the deadbeats who never paid their bills anyway can't get loans. People who are chronic late payers can't get loans. People with prior bankruptcy and foreclosure are waiting longer and must take steps to rebuild positive credit befre becoming eligible to buy again. None of these are bad things. It is the way it should be. If I am going to loan someone money to repay over a 10-30 year term I should be able to expect them to maintain a good record for at least the last 2-3 years.

We are back to what should be considered normal. If you manage your finances in a way the deserves consideration for a loan you will get one.