In the wake of the mortgage complications that plagued American economic markets during the fiscal crisis, financial regulators have become far more stringent when it comes to approving home loans.
Current mortgage standards are stiffer than they have been in decades, and financial regulators have put a sharp focus on conservative lending in order to protect consumers from taking on mortgage burdens that are bigger than they can bear.
As such, banks should take more care in reviewing all aspects of a home loan. While lenders will often focus on a homebuyer's credit score and annual income, it is also important to ensure a home is properly valued and that the debt-to-income ratio - which is based on a home's assessed value and selling price - has been accurately determined.
In order to do this, banks should obtain a full property history, including tax records, previous mortgages, repair history and appraised and sale valued of comparable homes in the area.
Tax records can be especially helpful in determining the appropriate value of a home and whether or not the debt-to-income ratio will be in properly balanced for the homebuyer. Sometimes, previous assessed values may be too low or high, which can impact a home's selling price.
Because home values in many areas have dropped, a thorough search of a property's tax history combined with common property taxes in the neighborhood may prompt a lender to have a piece of land reassessed.
A tax search may also turn up unpaid taxes and subsequent liens on a land. Because these liens will become the responsibility of the new homebuyer, they could possibly make the debt-to-income ratio higher.
While lenders would typically need to visit a county tax assessor's office to obtain this information, or muddle through burdensome county websites, CRS Data can now save them the trip. Its Bankers' Suite collects property tax data and houses it in one convenient space, making it simple for banks to obtain all of the data they need.
Median home values in the area may also help a bank to determine if a property is accurately priced and a safe investment. By discovering trends in home sales, banks may be able to predict whether a home's value will increase or decrease over time, which could factor into a lender's decision.
The tools also put all of this information in one place, allowing banks to gather everything they need to make an informed decision in a short amount of time.
“I say this…and I can’t say it enough-you have a great product, but you’ve got even greater people. And you are extremely responsive. You have a team that can service all 230 banks in my state.”
COLIN BARRETT - Tennessee Bankers Association