FHA Mortgage Guide

A loan officer named JJ has posted with us and made a complex point that includes FHA mortgages and all forms of real estate lending.

“Simply put if you can’t afford a house on a regular 30 fully amortized term don’t buy it,” says JJ. “And if you’re a good LO (loan officer) you should explain to your borrower they shouldn’t buy a house they can’t afford on a 30yr term. I refuse to do a loan my borrower can’t afford when it’s fully amortized.”

There are a lot of JJs within the lender community. They ought to be applauded. But the difficulty of their position should be recognized.

___If JJ won’t make a loan to an underqualified applicant, another lender will.

___In too many cases, JJ will not see a borrower until a home has been identified and an offer made. In other words, the borrower might lose a deposit by backing out of a transaction.

___It’s tough to do what JJ advocates, to turn down business that’s readily and legally available. How many of us would do that, especially when times are tough, business is slow and goals must be met?

___Buying, selling and financing homes are not just monetary transactions. When you tell someone that, gee, maybe they don’t need gold-plated faucets or a living room that’s as big as an airport lounge, people are displeased because it’s their ego, status and self-image which are being challenged. If you’re in the business of selling loans — or just about anything else — that’s a tough position to take.

I admire JJ and other lenders who act ethically, who say there are limits and who see borrowers as parties to be protected in the lending process. We should all understand that what JJ describes is terribly hard.

JJ’s complete post can be found by pressing here.

Check out these FHA resources for more information

This entry was posted on Thursday, February 21st, 2008 at 3:19 am and is filed under FHA. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.