Only 7 years ago you could get 100% financing for a home if you could fog a mirror by breathing on it. Anyone and everyone qualified. There were lenders doing 100% financing as low as 580 scores. All this was endorsed by the FED and eventually wiped out any true valuation as home prices soared.
What was the NET result? The government decided to bail the banks out with 750 billion tax payer dollars to enable them to lend. We the taxpayer gave the banks a “free second chance”. What was done for the consumers?
Instead of stimulating the economy by easing the lending restrictions the banks have made it virtually impossible for a small business owner, the self employed, or anyone who has bruises from the economic collapse to get financing. This is especially true for any investment real estate or business lending.
The lending poilicies are typically industry standard with little variance. There is almost no ability for the “banker” or “broker” to make independant decisions based on the true qualiying criteria of borrowers. Rigid qualifying guidelines require exceptions to be even marginally effective. A self employed borrower is not going to be reporting his gross income as taxable. He will claim as many exemptions as possible . It is the American way. Yet the lending system will look only at his net income. In short, if a borrower needs the money he typically doesn’t qualify for it.
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