The true issues are being confused. No doubt, those with poor credit or the inability to document their income are going to find it difficult or impossible to obtain a loan. However, customers with average credit who are seeking a conforming conventional loan, $417,000 or less, or a Federal Housing Administration or Veterans Administration loan, are not adversely affected by underwriting guidelines.
Government-sponsored agencies such as Fannie Mae and Freddie Mac still offer programs that allow 100-percent financing for low- to moderate-income borrowers. These agencies also offer fixed-rate programs with as little as 5 percent down. Neither requires the credit of a saint.
The FHA, which offers low fixed-rate loans of up to $200,160 in our area, is available with 3 percent down. VA loans provide 100-percent financing to active or retired military. Neither requires the credit of a saint.
Areas that were experiencing rapid appreciation, such as Florida and California, are the areas hit hardest with foreclosures and mortgage delinquencies. People speculated on the appreciation to continue; when it did not, they realized they could not afford the homes, nor can they sell them because values have retreated.
We are fortunate to have a strong local mortgage bankers association, and excellent conservative leadership in those who run our banks and mortgage companies. We never "bought into" the theory of buying more house than you can afford, and "hope" appreciation will bail you out later. No doubt, there has been tremendous turmoil in the subprime market, but do not confuse this with the conforming loans offered by local, reputable lenders.
Members of the Augusta MBA work diligently to inform consumers that it is possible to obtain a mortgage and you do not have to have the credit of a saint to receive it.
Frank Lee, Augusta