I had dinner last week with a friend who went to high school with me in Southern California. His wife is a very experienced mortgage underwriter, and it gave me an opportunity to ask some candid questions that are not easily answered in this crazy mortgage world.
Basically, she confirmed my synopsis of the current state of the mortgage market. Let me summarize our mutual thoughts:
This is why my very capable processor, who puts the paperwork together, is frustrated. This is also why it’s more expensive to process a loan. And this also is why I tell my clients that if they want a loan at today’s low interest rates, they need to say “How high?” when I politely ask them to jump.
With any luck, the gun-shy private sector soon will realize that the mortgage loans being granted today are indeed safe investments. And Fannie and Freddie should ease up on the threat to force loan buybacks and allow their lenders to use a little common sense. Otherwise, Federal Reserve Chairman Ben S. Bernanke’s successful efforts to reduce interest rates will continue to do very little to help the economy.
Henry Savage is president of PMC Mortgage in Alexandria. Send email to email@example.com.
By Elaine Donnelly
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