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ls this why the housingts so messed up?

IRST, I HopE you are having a good summer. It seems that we never had a spring this year in most of the country, and went straight from winter to summer. Most of my contacts say they never enjoyed the normal bump in spring, and that they are in what I have termed a "bobble-along time." Certainly,20l l has already already proved itself to not be the year of the long-awaited turnaround. While we are still seeing job losses and little hiring, the closing of businesses does seem to have slowed this year compared to last. Perhaps it suggests that the industry has taken the necessary steps to deal with its new reality. Nonetheless, it is still not an easy time for most.

I have heard from a number of you mostly agreeing with my comments in our June issue ( "Does Home Ownership Still Make Sense? ," p. 6). Since then, I have read some contradictory reports on that issue. Time will tell, but one major factor inhibiting the sale of homes has just become very evident to me personally. I just read that only about four out of 10 mortgages are now approved, meaning that six out of 10 buyers walk away empty handed and the sale or refinance does not happen. And, frankly, after the last month.I can well believe it.

From a period of giving mortgages away to anyone and everyone who could write their signature (or maybe not), the pendulum has swung the opposite direction. It has made me wonder how much this issue is now holding back tens if not hundreds of thousands of sales that our industry so desperately needs, as well as refinancing dollars to fuel the remodeling market and the overall economy. If one considers that home prices nationally are probably 307o to 4O7o lower than they were and are almost back to year 2000 levels, then so many people not qualifying really doesn't seem to make sense. The banks have simply over-corrected their loan requirements. No one could disagree that lending standards in the boom were far too lax, and the banks frankly got what they deserved. So to get back to paying themselves the big bonuses they are simply eliminating all risk and not doing what they are in business to do.

With the current low rates, I finally decided to refinance my mortgage. With a high credit score, a low loan-to-value application, a steady job, and anything any one could ask for to get a loan approved, I have spent a month faxing, emailing, and receiving letters from whoever to show and prove I am a worthy payer. After generating 200+ pages of documents, I am still not approved. Almost every day I get an email saying the loan is approved subject to this or that, but even when I address that issue I get the same reply with yet another condition. This has now reached the ridiculous, with requests for more and more documents, and it never seems to stop. There is absolutely nothing that should have made this anything but a rubber stamp mortgage. This tells me we have great problems.

This nonsense can only exacerbate the housing crisis and delay the recovery.I fully understand the need to tighten requirements. I understand that not everyone is entitled to a mortgage. But if my experience is similar to what everyone else's is, unless this situation gets back to reality of who really is a risk and who really isn't, we cannot see a recovery.

Every day borrowers with good credit and good history are failing to meet overly rigid requirements. They are perhaps tripped up by one automated red flag and turned down. They may meet the Fanny Mae and Freddie Mac requirements but then fail an overlay requirement required by the lender. No one can argue that the banks should be able to set their own requirements. but there has to be reason and sanitv. If solid. credit-worthy citizens are being turned away in quantity, there is something desperately wrong with the system. There has to be a happy medium, and todav there is clearlv not.

Have a good rest of the summer. I am headins back to the fax machine!

Alan Oakes, Publisher ajoakes@aol.com www. building-products.com

A publication of Cutler Publishing 4500 Campus Dr., Ste. 480, Newport Beach, CA 92660

Publisher Alan 0akes ajoakes@aol.com

Publisher Emeritus David Cutler

Director of Editorial & Production David Koenig dkoenig@building-products.com

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Contributing Editors Dwight Cunan, Carla Waldemar, James Olsen, Jay Tompt, Mike Dandridge

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