Home Lending Pal - Newsletter

In 2010, one of our co-founders, Steve Better, was a Consumer Loan Underwriter for Wells Fargo. He was tasked with reviewing applications for loan modification. These were applications by people who were trying to stay in their homes. As he reviewed the applications, he saw the mistakes over and over again. Consumers consistently overstated their credit scores and income, and underwriters approved those loans based on incorrect information.

As Steven continued in his career as an underwriter he began to understand how broken the process was. It took almost 60 days to close a loan and the application was paper-based. Applications were frequently stalled because they were missing documents and the borrower had no insight into the process. Borrowers never knew how much longer the process would take and If the application was declined, there was no clear, actionable information to use when preparing to reapply. Worst of all, the application was so long and involved most borrowers didn’t shop for a more competitive loan. He started to wonder if there was a better way to do things.

Ten years later the process hasn’t changed much but the price of a home has. In the aftermath of the subprime crisis lobbyists convinced the federal government that Private Equity Groups were the only entity that could purchase all the homes that were abandoned. And the largest generation in history entered their prime home buying years. Today, adulting with a college education, a car and a home requires about $300k in debt.