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

Washington Mutual is working on a broker construction loan program again.

Wamu has shut its great construction loan program down to wholesale brokers 3 times over the the last year.

I think they must think that people are going to stop building homes or that the construction loan department is expendable.

Wamu has either very intelligent upper management or they skipped the common sense course of business in college.

Regardless im happy to report that they are working on a broker submission quasi wholesale department.

I will update on the details as soon as I hear its official.

Rick Gomez

http://www.californiaconstructionloans.com

http://www.nationwideconstructionloans.com