Really, what happened to Indy Mac Bank, Bismark Mortgage, National City, Washington Mutual, First Horizon, etc? Well the only thing I can say is wow. Our daily statement that we utter around the office these days is “it is what it is” but is it really. Construction loans are the backbone of the American Dream and if some of these banks do not come back in the business soon families are going to miss out on two American dreams, 1. A Dream Home and 2. Good Old American Competition.

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Construction refinancing - I was told that it is quite difficult to get construction loan as it is not like mortgage loan. The loan lenders has to know more detailed of your planned construction before they loan you their money. And, that’s why construction loans …

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Washington Mutual has shut down the entire construction loan department nationwide. Wamu management is so lucky I’m not the CEO of their bank because I would fire upper management before I ever shut down one of Washington Mutual best products their “construction loans“. Wamu may be in trouble just like a lot of other banks in the industry right now but the idea that families are no longer going to build their dream home is rediculous. The best customers in the entire mortgage spectrum is the family home builder. Where else can you find people with excellent credit, land equity and stronger credit leverage than through families that build a dream home for themselves to live in the rest of their lives. Like I said, upper management heads would be rolling if I were in charge. Management is using big home builder statistics to keep their cost cutting jobs instead of protecting the America Dream and their highest quality product and customer. Good Luck Wamu, it was fun working with you but your days are numbered and you can thank upper management.

We receive construction loan applications every day and one of the most important variables when filling out the application package is completing all of the details. You know the old saying “We cannot read your mind” well some how customers over the past few years have been trained that filling out the loan application completely is not that important. Well, the simple stated income days are over with at least for the next few years until technology figures out a better way to verify the imperfect means for qualifying customers ability to pay back their monthly mortgage payment. Im here to say that’s impossible because even if you applied for a fully documented loan with 2 years tax returns, paystubs, w’2s and a high paying job, if you get fired tomorrow you still cannot afford to pay the monthly mortgage payment. So, fill out every detail of your loan application package and the odds are with the help of your loan officer that you will be able to obtain the best possible loan that best fits your overall needs. Most importantly no one knows what monthly mortgage payment you can afford to make better than you so stick to your personal financial requirements and you should do fine.

The construction loan market has officially slowed down and even though banks are continuing to tighten their guidelines banks are wanting business. Banks are wanting quality loans with excellent credit, cash equity, down payments, liquid assets etc. These are the same guidelines that were required 10 years ago before the recent real estate boom. Even though things have stepped back into good old fashioned credit risk criteria technology is still changing the future of lending with paperless speed and internet technology.

I cant remember a time when the mortgage industry was being hit so hard that everyday has a new surprise. First of all construction loans are probably the complete opposite of the sub prime market that everyone is blaming the crash on. Most families that are building a new home usually bring a big down payment to the table in the form of land equity. Secondly from my 24 years experience providing construction loans most families that build a new home typically have excellent credit.

Remember we are not talking about buying a newly built home with no down payment and poor credit we are talking about families that own land and build a new home for themselves. So now everyone is pointing the finger as to who is at fault for how easy it was to obtain a loan to buy a home. Well we all now know those days are over with and so now its a battle of who’s to blame. But before the finger pointing starts lets leave the quality construction loan market out of it with the exception of the natural falling appraised values in some markets.

So who’s to blame for this fiasco? First I heard Alan Greenspan was at fault for easy money policies then I heard it was the banks now I’m hearing it was the loan brokers selling these programs etc, etc, etc. As far as I’m concerned everyone and I mean everyone is to blame. Everyone from the Fed to the little guy knew exactly what was going on, now everyone is now playing dumb and no one wants to take responsibility.

So my advice is rather than watch the implosion of America and rather than watch the American economy turn into the economy of a third world country everyone better stop pointing and start resolving. If we all don’t focus on the solution our economy we could easily go into a economic dark ages never seen before.  I believe the new Internet economy and technology is changing everything from buying cars to having nationwide and worldwide businesses. I really think the digital internet economy and taking fiscal responsibilty is the answer to this crisis.

Construction loans are being hit by the overly conservative credit crunch. So if you have a customer and the credit score is 679 and you need a 680 or better than its time to get familiar with credit rapid re-score. We have been having excellent results with bettering our clients credit scores through Advantage Credit. Over the past couple of weeks we submitted 2 clients through the rapid rescore program and within 5 minutes we receive a report showing us exactly what the customer needs to pay off in order to increase the FICO score. We gave the report to the customer to pay off the particular accounts or to pay them down and once we have the proof of payment back we fax it to Advantage and within a couple of days new and improved credit score.

Construction loans are settling down along with the market. We at californiaconstructionloans.com are still very busy as always since California is one the largest states in the country as well as the richest. Interest rates are expected to rise some more and that may hinder the real estate market again. The focus in lending is conservative underwriting as is should be just as long as the underwriters do their job objectively and not irrationally. We are expecting to finish the year for the better even though the first half of the year had a lot of changes.

Well it had to happen, construction loan appraisals are getting a second review. Building a home is the true American way to own a new home. Families have always dreamed of building their own home and building a new home will always be the American dream. Building a new home is the safest home loan project request available because of the land equity that is brought to the closing table. The lending industry seems to be taking out the sub prime problems on the mortgage industry as a whole. Lenders are now requiring appraisal reviews on construction loan projects due to the lower appraised home values in key areas throughout California. Even with land free and clear and excellent credit scores customers are finding the loan process a little more difficult which if not corrected may have a major economic down turn for the worse.

Tags: construction loans, new home construction loan,

Construction loan lenders are resorting to very conservative underwriting guidelines.The underwriting guidelines for stated income has officially changed. First Horizon for example has gone overboard with particular formula for all stated income loans. The formula is so conservative that if the client has a high 700 credit score, land free and clear, own’s their own business and average liquid assets they will kill the deal. Our office had recently sent a 1.6 million dollar construction loan request for a client with the above criteria with plenty of assets and was turned down due to the client owning his auto dealership (Mitsubishi) for less than 2 years. The client has been in the same line of work for many years. When banks like First Horizon become this conservative or this paranoid there definitely is problems in the lending and mortgage industry.

So what is going on, well you heard about all the sub prime lending that is currently backfiring due to stated income, poor credit loans that should have never been approved. It looks like the good loans are going to pay for those bad loans through typical American incompetence. First Horizon has a sub prime department that went belly up so some genius in upper management (once he or she pulled their head out of their you know what) has probably decided to protect their job by providing the ultimate business killer super conservatism. Super conservatism is accomplished by taking regular conservatism and taking out any rationality or by adding incompetence. Then you take a little fear of loss of job and add a bit of cover your ass and there you have it, super conservatism.

Construction loans are the safest loans in the entire industry for many reasons, one being most people that build their home have excellent credit. Most people that build bring a large down payment to the table called land equity (unlike sub prime loans). Most people that build are building their dream home on their dream land. Most people that build own another home to be sold which usually brings even more equity to the deal once the new home is completed. All of these benefits are the complete opposite of sub prime lending. So lenders and banks everywhere do not take out your underwriting incompetence on the best loans in the industry, construction loans.

If your interested in obtaining a great construction loan with a rational bank, give me a call or come to my web site and I will help you.

Sincerely,

Rick Gomez

http://www.californiaconstructionloans.com

http://www.nationwideconstructionloans.com

Tags: new home construction loans, Tags: California construction loans, Tags: construction loan