A significant drop in distressed home sales and resulting smoother transactions in recent years moved REALTORS®®' satisfaction level with lenders to a more positive side, according to findings from the latest Lender Satisfaction Survey conducted by the California Association of REALTORS®®. At a current index of 66, the survey's Lender Performance Index (LPI) has increased consistently since the survey began in 2010, suggesting a continuous improvement in the lending process due primarily to an improving housing market.
The index improved only negligibly between 2010 and 2011, when distressed transactions made up more than half of total home sales. During that time period, the index inched up from 31 to 33, but increased from 41 in 2012 to 56 in 2013 and at the end of 2014 stood at 66.
For all transactions, including distressed and traditional equity sales, on a scale of 1 to 5, with 1 being "very dissatisfied" and 5 being "very satisfied," REALTORS®®' average overall satisfaction with lenders was 3.7 in 2014, up from 3.2 in 2013, 2.7 in 2012, and 1.9 in 2011.
While lenders have made progress since 2011, there is still room for improvement. The state REALTOR®® group's Underwriting Standards Index (USI) finds there is still difficulty in equitable access to financing for consumers. This index measures the satisfaction REALTORS®® have with lenders/servicers based on their most recent home sale transaction with specific focus on underwriting in the lending process.
The underwriting standards index of 23 suggests an improvement in the lending process when compared to the prior year, when the index was at 17. Much of this improvement can be attributed to fewer reporting that underwriting standards have tightened (41 percent in 2014 versus 49 percent in 2013).
One lending process that has improved is ease of closing a transaction, most likely due to a shift in the market from distressed sales to non-distressed transactions over the past few years. In 2011, nearly half (49 percent) rated the ease of closing a transaction as "extremely difficult." That figure has dropped to one in five (20 percent). Those rating closing a transaction as "extremely easy" increased from 8 percent in 2011 to 27 percent in 2014.
Even though some steps moved forward, there still remains much room for opening up the credit box for well-qualified, responsible home buyers. "More needs to be done, especially in meeting the needs of creditworthy buyers who are unable to qualify for a loan due to thin credit histories or extenuating circumstances, like medical debt," said Chris Isaacson, president of the Silicon Valley Association of REALTORS®®. "Overly restrictive lending has prevented many otherwise qualified buyers from entering the housing market."
The state REALTOR®® group began conducting its Lender Satisfaction Survey in 2010 and was primarily focused around short sale transactions, in an effort to gauge REALTORS®®' experience in working with lenders or servicers during their most recent transaction. The survey expanded in 2011 to encompass all transactions. The most recent survey was conducted in November and December 2014.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.