Five Questions

Some of the recent changes in mortgage banking as a result of the national credit crunch are unlike any Ed Erickson has experienced in his 21 years in the business. For the past 11 of those, he’s been with Fifth Third Bank. He moved about a year ago from Chicago to Southwest Florida, where he and his staff have been helping homeowners deal with the housing slump and credit crunch. The 46-year-old oversees mortgage loan originators across South Florida and helps them steer customers toward loan and refinancing options to suit their circumstances.

1. What kinds of questions and challenges are you hearing now that differ from those in past years?

More servicing requests: "I’d like to refinance but I don’t know what to do," or, "I know my house is now worth less than what I owe on the mortgage. Is there anything available to me?" For those people who are looking to refinance, we’re running into a lot of appraisal issues: Values are decreasing, and, in some cases, people are unable to refinance. There have been so many changes in the industry, from private mortgage insurance [to] Fannie Mae and Freddie Mac changing guidelines, so it’s a matter of helping [customers] work through issues [and] making sure they understand guidelines.

2. How have changes in the lending business affected the local real estate industry?

It’s impacted the "jumbo" market—loans typically above $417,000; however, we have seen some recent improvement on that. [Rates for] "conforming" loan amounts—loan amounts below $417,000—are much better than the jumbos. With the [federal economic] stimulus package, in Collier County in particular, Fannie and Freddie are having to temporarily increase the conforming loan limit to over $531,000 because of [Collier’s high] median prices. More homeowners can refinance and more purchase transactions can happen up to $531,000.

3. How have guidelines changed for private mortgage insurance and for Fannie and Freddie?