Housing Sales Up – So Is Loan Nonsense

The great news is that housing for investment purposes is still strolling along at many price points.  But I want to point out that the mistakes learned in our last real estate recession are still affecting our loan parameters today.  And that’s generally a good thing.

But seriously, if you are buying $944,000 worth of real estate and you are putting down 55% of the value AND paying all the closing costs out of pocket, how is it possible to be a credit risk?

The scenario above has 5 duplexes with, of course, 10 units.  9 of the 10 are rented.  The other one could easily be rented before closing. No sweat.  Cap rate?  Debt coverage ratio?  All within the parameters that the mortgage banker has set.

And yet, someone has decided, arbitrarily mind you, that they can only write four loans, not five.  So now we have to go find another lender.  Ok, fine.  But really, who loses here?

I realize this may sound like I’m griping for griping’s sake.  But at what point do people start examining each situation instead of coming up with rules to hide behind?  Not just in the lending business. But in everything we are involved in.

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