Part 4: The Market from the Eyes of a Loan Officer

Part 4 of this series of interviews with respected professionals working in the Chicago real estate market is from the perspective of loan officer, Ken Dickerson of RWF Mortgage.

Ken Dickerson has been in the sales profession since 1984 in a variety of sales, sales training, and management positions mostly in the printing industry. In 2001 he turned to the mortgage profession as a loan officer, with RWF Mortgage, an affiliate of Wells Fargo, for over 3 years.

Q. Depending on who you talk to, the Chicago real estate market is in a state of flux or a total standstill. Where is most of your business coming from now? Refinance? Job Relocation companies? New purchase? Banks?

A: From mid November until late January a majority of my business has been refinance business. Beginning late January 90% of the business is new purchase business.

Q: What are today's biggest challenges? Have you seen any positive changes as a result of this market correction?

A: The biggest challenge is keeping up with all of the guideline changes and trying to communicate the changes to clients that had previously been pre-approved. The changes have been a reality check for prospective purchase and refinance customers. It's hard to go backwards after borrowing money was so easy for several years and some clients really struggle with it.

Q: We've been going through a huge new construction boom here. Thoughts on the Spire, Trump Tower and other big ticket projects? Do you think the hotel/condo format will be sustainable in Chicago? How long do you think it will take to all be absorbed?

A: With the tightening of lending guidelines the new construction developments will take a hit until they are complete. It will be very difficult to obtain financing on the industry identified higher risk structures such as uncompleted developments or hotel/condo combinations.

Q: With new regulations, what has changed with lending? How much are buyers required to put down? How do you see the new stimulus package taking effect with regard to new loans and existing loans? With this week's news, have you seen a bump in purchase loan applications?

A: I'm afraid to answer this string of questions because as soon as I do the guidelines could change. While credit rating has always been a key component of the financing picture it is now a major factor in interest rate and obtaining a loan. No longer can you secure no income, no asset loans as everything is full documentation. Even with the full documentation you could be required to show an audit trail of any large deposits in any of your asset accounts, and explain and credit check activity that shows on a credit report over the past 90 days. You still have low down payment options with FHA at 3 1/2% however; FHA can be restrictive when it comes to condominiums. Other than that for conventional conforming loans you currently need a minimum of 10% down payment. Just recently a majority of banks are requiring a 30% down payment and a minimum credit score of 720 to obtain a jumbo loan.

I have seen an increase in purchase applications but it's more to do with the time of year than anything else at this point.

Q: With new construction what hurdles are you encountering? How have investors been affected? How are commercial loans affected?

A: New construction guidelines are changing to 70% units either sold or under contract to obtain financing. Again, this reflects the high risk associated with new construction condos by the banking community. Investors will need a substantial down payment and the guidelines are also becoming more restrictive on the % of units in the development that can be investor owned.


Q: Real estate is local. Which neighborhoods are you busiest in? Are you writing more loans for single family homes doing better than condos?

A: In the Chicago market we will always be writing a large number of condo loans. In Chicago single family homes usually require a jumbo loan and until lately the only rate that was worth considering was the 5 year ARM. Just recently the 30 year fixed has dropped and with a 30% down payment and a 720+ FICO score you can get a very good rate. I have always been busiest with the Lincoln Park and Lakeview neighborhoods and that hasn't changed. I have seen more activity in the Lincoln Square, Ravenswood, and Roscoe Village neighborhoods as well.

For more information about Ken, questions about mortgages or to hire him as your lender, contact him directly at kenneth.b.dickerson@rwfmortgage.com or 773-572-6540.