REALTORS® Report Tight Financing/credit

Each month, the National Association of REALTORS® gathers up-to-date and on-the-ground incisive comments from REALTORS® who participate in the REALTORS® Confidence Index (RCI) survey. The RCI survey tracks expectations about overall market conditions, buyer/seller traffic, price, buyer profiles, and issues affecting real estate.  The November 2012 survey was conducted during November 26 through November 30, 2012. All real estate is local and conditions in specific markets may vary from the national trend.

One of the major concerns is the tight credit conditions. Access to financing remains  difficult, benefting cash buyers, and the process remains protracted, causing delayed closings  and risking cancellations.  There are reports that banks are asking for higher credit scores, with a report of a bank rejecting a score of as high as 800. There is also lack of assistance for helping current homeowners who are slightly delinquent to modify keep their homes. Here is what REALTORS® are saying:

  • Financing taking too long (underwriting/processing with a radical amount of multiple review creating a back log) which results in confusion in the final days leading up to closing.
  • Lenders are not making closing dates.  45-60 days are being given per contract and we are seeing as much as a 2 month delay in closings.
  • The mortgage industry is continuing to be in a difficult process. They are taking the process to the extreme and even offending strong buyers with credit scores in the 800’s.
  • 35% of my buyers contracts have been terminated due to lenders and underwriters changing qualifications in the process, and buyers losing money for inspections and appraisals
  • Lender are being more aggressive (in a good way) working with Short Sales. They need to be more aggressive with Loan Modification.

Jed Smith, Managing Director, Quantitative Research

Jed Smith is Managing Director, Quantitative Research with the National Association of Realtors®. He has worked on real estate issues for the past 20 years, providing input on a variety of housing, commercial real estate, tax, and planning issues. Recently he has been involved in several international studies.

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  1. The most important thing that a broker/banker can do is meet the needs of the real estate contract. In the 13 years that I have been a mortgage broker/banker I have never missed a contract date. Realtors need to be looking for a lender that has a proven track record of performance. The rate has to be competitive and a broker can give you a variety of lenders that can perform on time as well as give you a competitive rate. Unfortunately, the larger banks have gotten rid of the experienced people to cut costs and don’t have fully trained and experienced personnel. Realtors – quit looking for fluff and challenge the tried and true broker to get your job done on time. You and your client will not be sorry.