It’s Back to the Future for mortgage people in the mountain west
Mortgage loan guidelines featuring significant down payments, stiff income to debt qualifying ratios, reams of documentation, with assets, income and cash reserves being carefully verified and thoroughly vetted; but wait, there’s more:Capital markets that accept only the most vanilla properties as collateral, with some, notably certain condo projects, excluded almost entirely from mortgage money – particularly devastating to Colorado’s Western Slope with its resort communities.Things are tough today, right? Well, maybe; but what was just described was the real estate finance landscape in about 1979. In fact, it arguably was harder to get a mortgage loan then than now, what with interest rates hovering between 8 percent and 10 percent. Compare that to the below 5 percent cost of money today, and do the math.The availability of capital is a bigger factor in a region’s economic health than the cost of capital. Money was tight for many property types that abound here; for example, try getting a mortgage on a condo unit in a project classified by lending guidelines as a condotel.So, it’s Back to the Future for mortgage people in the mountain west. Back in the day, money didn’t automatically flow from capital rich areas to capital deficient ones. You had to go out and get it. There was a core of financial institutions and mortgage companies that perceived the problem and accepted the challenge: First Western Mortgage, in Aspen and Vail; E.V. Chilson & Co. in Aspen; Aspen Savings in Aspen; and Alpine Federal Savings (not affiliated with Alpine Bank) in Steamboat Springs.The owners and managers of these entities ranged the country to find mortgage capital, and rewarded those investors with extremely high quality mortgage paper.Today, just as then, there are opportunities for those on both sides of the mortgage equation: producers on one hand, and capital, which is currently desperate for good, clean assets. Some mortgage professionals have figured this out, and have begun anew selling money people on the merits of mountain mortgage lending.This translates into a twofold benefit for regional banks in the area. Since the gorillas, like Countrywide, Lehman Brothers, and others have left the building, and Fannie and Freddie have, in classic lender fashion, locked the barn door after the horse’s escape, banks can put good loans in portfolio and use their contacts to participate loans with other banks in capital rich markets. Unfortunately for those of us looking for money, many haven’t yet perceived this.It seems there’s a certain rhythm to the movement of money. One wonders if 40 or 50 years from now some geezer like yours truly will reminisce, “Why, son, today it’s just like it was back in twenty aught eleven. …”Pat Dalrymple is a valley native. He’s been in the mortgage and banking business since 1961. He’ll be happy to answer your questions or hear your comments. His e-mail is dalrymple@sopris. net.
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