Bank Finance Needed to Support Your Business – 11 Points to Consider

Most requests for bank finance are turned down not because clients are a poor credit risk but because they have approached their bank ill-prepared. Get ahead by communicating the right information the first time.

CASHFLOW Provide data that shows you understand and can manage your working capital (debtors, creditors and stock) and that the cash in your business is sufficient to cover the bank’s interest (as well as other key costs such as tax, dividends and replacement capital). “Cash is king” and even profitable businesses can fail if cash is not managed. Understand your cash movements and you may even need to borrow less.

OUTLOOK Present forecasts which communicate the amount required, payback period, risk and return to the bank. Figures should be more sophisticated than forecast sales and profit and should ideally show the relationship between profits, your balance sheet and cash flows. Sensitivity analysis is important to help the bank understand when they risk non-repayment. Forecasts should always be based upon the most up to date actual data.

MARKETS Explain your market. Focus 20% of your efforts explaining what has happened and 80% on what you expect to happen and why. Do not worry, top economists sometimes get this wrong too. The point is you need to show the bank you have thought about it, considered the likely outcomes and that you have a clear action plan.

MIX AND QUALITY OF CLIENTS Detail clients by name/industry/region/contract length. The strength of your clients and their ability to pay = the strength of your business. Building your business around one client is high business risk.

UPDATE Give the bank up to date management information especially if annual accounts are dated. Information should be produced at least quarterly, split into division/region and include profit, balance sheet and cash flow breakdowns. Management information should be used to update forecast/budget data and any differences should be explained.

NEED FOR LIQUIDITY Show the bank that your business is liquid and can survive. Tell them how quickly you get your hands on the cash and know your debt maturities, credit terms and what cash is tied up in assets. Think beyond a simple current assets/current liabilities ratio and consider your ideal liquidity position. Remember too much liquidity means assets could be generating a higher return elsewhere.

INCOME Know your financial definitions. Are you talking about gross profit, operating profit, net profit or EBITDA (earnings before interest tax, depreciation and amortisation)? All are common in the financial analysis of businesses. Also ensure you can discuss the seasonality and cyclicality of your industry.

COMPETITION Tell the bank how you have you performed in comparison to your competitors? Be prepared to discuss your competitors’ strengths and weaknesses. This provides confidence that you are a proactive management team that really understand the business.

ACTIVITIES Break your business down by activity/division and tell the bank which activities are performing well and which are a cash drain and why. Explain how divisions complement or overlap each other and the strategy for each. Be ready with forecasts if necessary.

TRACK RECORD Unless starting up, provide at least 3 years accounts to a bank (5 years ideally if approaching a new bank) and up to date management accounts. A bank will need this data for the financial analysis of the trends in ratios and margins. It will also give them confidence in your management track record.

EQUITY, DEBT AND THE BALANCE SHEET Communicate your risk (equity/directors’ loans) versus the risk to the bank. Know the real strength of your balance sheet by having current market values of assets to hand and full details of debt (including off-balance sheet exposure such as leases and guarantees). Be clear at the outset what security is and is not on offer.

Forward Financials are experts in the financial analysis industry and as Qualified Accountants, Qualified Bankers and City Analysts combined we speak the language. With our comprehensive financial pack you can make a professional approach to lenders, shop around for the best deal and negotiate fees from a stronger position. We do not believe in a template approach as every business has different drivers and needs. We therefore build bespoke financial models to forecast sales, profits and cash flow. We also provide historic, competitor and market analysis.

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How to Secure New Financing From Alternative Lenders to Eliminate Working Capital Constraints

Securing traditional financing through banks and other financial organizations remains highly challenging for many businesses. As banks pull back more traditional commercial-and-industrial lending, they are often unable to lend even to small businesses with solid financials. And as their security demands increase, some companies are pushed into distress or unable to take advantage of commercial growth opportunities.

If your company is performing well, you may sill find it difficult to secure sufficient growth capital from your current lender- even though you are growing according to projections. Refinancing a previous line of credit can help support your company’s continued domestic and international growth, especially if your company is stuck in a credit facility that was put in place when your performance was not as strong. Your previous small business loan may have been appropriate at the time, but after a couple years, the pricing may no longer be appropriate for current performance.

It’s a real sign of the times when banks stop or restrict advances against inventory due to internal changes or re-organization. For example, it’s common for lenders to deleverage the inventory financing available to a company and restrict additional funds – even if a company’s numbers are growing.

So what do you do if you’re doing great, but your bank isn’t?

When a bank makes their problems your problem, your business can fall victim to high pricing and/or reduced growth capital due to circumstances at the bank that have nothing to do with your own company’s performance.

In order to capitalize on upcoming commercial growth opportunities, businesses need financing that is affordable and intelligently structured. It is important to look for a lender that recognizes this and is able to refinance your line of credit and increase borrowing availability to support your company’s continued growth.

An experienced alternative lender can secure a credit facility that serves to refinance your previous line of credit. In addition to helping you solve any funding problems created by the bank, an alternative lender may also find it appropriate to work with affiliates to successfully structure and arrange an optimal financing arrangement.

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Best in Class Finance Functions For Police Forces

Police funding has risen by £4.8 billion and 77 per cent (39 per cent in real terms) since 1997. However the days where forces have enjoyed such levels of funding are over.

Chief Constables and senior management recognize that the annual cycle of looking for efficiencies year-on-year is not sustainable, and will not address the cash shortfall in years to come.
Facing slower funding growth and real cash deficits in their budgets, the Police Service must adopt innovative strategies which generate the productivity and efficiency gains needed to deliver high quality policing to the public.

The step-change in performance required to meet this challenge will only be achieved if the police service fully embraces effective resource management and makes efficient and productive use of its technology, partnerships and people.

The finance function has an essential role to play in addressing these challenges and supporting Forces’ objectives economically and efficiently.


Police Forces tend to nurture a divisional and departmental culture rather than a corporate one, with individual procurement activities that do not exploit economies of scale. This is in part the result of over a decade of devolving functions from the center to the.divisions.

In order to reduce costs, improve efficiency and mitigate against the threat of “top down” mandatory, centrally-driven initiatives, Police Forces need to set up a corporate back office and induce behavioral change. This change must involve compliance with a corporate culture rather than a series of silos running through the organization.

Developing a Best in Class Finance Function

Traditionally finance functions within Police Forces have focused on transactional processing with only limited support for management information and business decision support. With a renewed focus on efficiencies, there is now a pressing need for finance departments to transform in order to add greater value to the force but with minimal costs.

1) Aligning to Force Strategy

As Police Forces need finance to function, it is imperative that finance and operations are closely aligned. This collaboration can be very powerful and help deliver significant improvements to a Force, but in order to achieve this model, there are many barriers to overcome. Finance Directors must look at whether their Force is ready for this collaboration, but more importantly, they must consider whether the Force itself can survive without it.

Finance requires a clear vision that centers around its role as a balanced business partner. However to achieve this vision a huge effort is required from the bottom up to understand the significant complexity in underlying systems and processes and to devise a way forward that can work for that particular organization.

The success of any change management program is dependent on its execution. Change is difficult and costly to execute correctly, and often, Police Forces lack the relevant experience to achieve such change. Although finance directors are required to hold appropriate professional qualifications (as opposed to being former police officers as was the case a few years ago) many have progressed within the Public Sector with limited opportunities for learning from and interaction with best in class methodologies. In addition cultural issues around self-preservation can present barriers to change.

Whilst it is relatively easy to get the message of finance transformation across, securing commitment to embark on bold change can be tough. Business cases often lack the quality required to drive through change and even where they are of exceptional quality senior police officers often lack the commercial awareness to trust them.

2) Supporting Force Decisions

Many Finance Directors are keen to develop their finance functions. The challenge they face is convincing the rest of the Force that the finance function can add value – by devoting more time and effort to financial analysis and providing senior management with the tools to understand the financial implications of major strategic decisions.

Maintaining Financial Controls and Managing Risk

Sarbanes Oxley, International Financial Reporting Standards (IFRS), Basel II and Individual Capital Assessments (ICA) have all put financial controls and reporting under the spotlight in the private sector. This in turn is increasing the spotlight on financial controls in the public sector.

A ‘Best in Class’ Police Force finance function will not just have the minimum controls to meet the regulatory requirements but will evaluate how the legislation and regulations that the finance function are required to comply with, can be leveraged to provide value to the organization. Providing strategic information that will enable the force to meet its objectives is a key task for a leading finance function.

3) Value to the Force

The drive for development over the last decade or so, has moved decision making to the Divisions and has led to an increase in costs in the finance function. Through utilizing a number of initiatives in a program of transformation, a Force can leverage up to 40% of savings on the cost of finance together with improving the responsiveness of finance teams and the quality of financial information. These initiatives include:


By centralizing the finance function, a Police Force can create centers of excellence where industry best practice can be developed and shared. This will not only re-empower the department, creating greater independence and objectivity in assessing projects and performance, but also lead to more consistent management information and a higher degree of control. A Police Force can also develop a business partner group to act as strategic liaisons to departments and divisions. The business partners would, for example, advise on how the departmental and divisional commanders can meet the budget in future months instead of merely advising that the budget has been missed for the previous month.

With the mundane number crunching being performed in a shared service center, finance professionals will find they now have time to act as business partners to divisions and departments and focus on the strategic issues.

The cultural impact on the departments and divisional commanders should not be underestimated. Commanders will be concerned that:

o Their budgets will be centralized
o Workloads would increase
o There will be limited access to finance individuals
o There will not be on site support

However, if the centralized shared service center is designed appropriately none of the above should apply. In fact from centralization under a best practice model, leaders should accrue the following benefits:

o Strategic advice provided by business partners
o Increased flexibility
o Improved management information
o Faster transactions
o Reduced number of unresolved queries
o Greater clarity on service and cost of provision
o Forum for finance to be strategically aligned to the needs of the Force

A Force that moves from a de-centralized to a centralized system should try and ensure that the finance function does not lose touch with the Chief Constable and Divisional Commanders. Forces need to have a robust business case for finance transformation combined with a governance structure that spans operational, tactical and strategic requirements. There is a risk that potential benefits of implementing such a change may not be realized if the program is not carefully managed. Investment is needed to create a successful centralized finance function. Typically the future potential benefits of greater visibility and control, consistent processes, standardized management information, economies of scale, long-term cost savings and an empowered group of proud finance professionals, should outweigh those initial costs.

To reduce the commercial, operational and capability risks, the finance functions can be completely outsourced or partially outsourced to third parties. This will provide guaranteed cost benefits and may provide the opportunity to leverage relationships with vendors that provide best practice processes.

Process Efficiencies

Typically for Police Forces the focus on development has developed a silo based culture with disparate processes. As a result significant opportunities exist for standardization and simplification of processes which provide scalability, reduce manual effort and deliver business benefit. From simply rationalizing processes, a force can typically accrue a 40% reduction in the number of processes. An example of this is the use of electronic bank statements instead of using the manual bank statement for bank reconciliation and accounts receivable processes. This would save considerable effort that is involved in analyzing the data, moving the data onto different spreadsheet and inputting the data into the financial systems.

Organizations that possess a silo operating model tend to have significant inefficiencies and duplication in their processes, for example in HR and Payroll. This is largely due to the teams involved meeting their own goals but not aligning to the corporate objectives of an organization. Police Forces have a number of independent teams that are reliant on one another for data with finance in departments, divisions and headquarters sending and receiving information from each other as well as from the rest of the Force. The silo model leads to ineffective data being received by the teams that then have to carry out additional work to obtain the information required.

Whilst the argument for development has been well made in the context of moving decision making closer to operational service delivery, the added cost in terms of resources, duplication and misaligned processes has rarely featured in the debate. In the current financial climate these costs need to be recognized.


Within transactional processes, a leading finance function will set up targets for staff members on a daily basis. This target setting is an element of the metric based culture that leading finance functions develop. If the appropriate metrics of productivity and quality are applied and when these targets are challenging but not impossible, this is proven to result in improvements to productivity and quality.

A ‘Best in Class’ finance function in Police Forces will have a service focused culture, with the primary objectives of providing a high level of satisfaction for its customers (departments, divisions, employees & suppliers). A ‘Best in Class’ finance function will measure customer satisfaction on a timely basis through a metric based approach. This will be combined with a team wide focus on process improvement, with process owners, that will not necessarily be the team leads, owning force-wide improvement to each of the finance processes.

Organizational Improvements

Organizational structures within Police Forces are typically made up of supervisors leading teams of one to four team members. Through centralizing and consolidating the finance function, an opportunity exists to increase the span of control to best practice levels of 6 to 8 team members to one team lead / supervisor. By adjusting the organizational structure and increasing the span of control, Police Forces can accrue significant cashable benefit from a reduction in the number of team leads and team leads can accrue better management experience from managing larger teams.

Technology Enabled Improvements

There are a significant number of technology improvements that a Police Force could implement to help develop a ‘Best in Class’ finance function.

These include:

A) Scanning and workflow

Through adopting a scanning and workflow solution to replace manual processes, improved visibility, transparency and efficiencies can be reaped.

B) Call logging, tracking and workflow tool

Police Forces generally have a number of individuals responding to internal and supplier queries. These queries are neither logged nor tracked. The consequence of this is dual:

o Queries consume considerable effort within a particular finance team. There is a high risk of duplicated effort from the lack of logging of queries. For example, a query could be responded to for 30 minutes by person A in the finance team. Due to this query not being logged, if the individual that raised the query called up again and spoke to a different person then just for one additional question, this could take up to 20 minutes to ensure that the background was appropriately explained.

o Queries can have numerous interfaces with the business. An unresolved query can be responded against by up to four separate teams with considerable delay in providing a clear answer for the supplier.

The implementation of a call logging, tracking and workflow tool to document, measure and close internal and supplier queries combined with the set up of a central queries team, would significantly reduce the effort involved in responding to queries within the finance departments and divisions, as well as within the actual divisions and departments, and procurement.

C) Database solution

Throughout finance departments there are a significant number of spreadsheets utilized prior to input into the financial system. There is a tendency to transfer information manually from one spreadsheet to another to meet the needs of different teams.

Replacing the spreadsheets with a database solution would rationalize the number of inputs and lead to effort savings for the front line Police Officers as well as Police Staff.

D) Customize reports

In obtaining management information from the financial systems, police staff run a series of reports, import these into excel, use lookups to match the data and implement pivots to illustrate the data as required. There is significant manual effort that is involved in carrying out this work. Through customizing reports the outputs from the financial system can be set up to provide the data in the formats required through the click of a button. This would have the benefit of reduced effort and improved motivation for team members that previously carried out these mundane tasks.

In designing, procuring and implementing new technology enabling tools, a Police Force will face a number of challenges including investment approval; IT capacity; capability; and procurement.

These challenges can be mitigated through partnering with a third party service company with whom the investment can be shared, the skills can be provided and the procurement cycle can be minimized.


It is clear that cultural, process and technology change is required if police forces are to deliver both sustainable efficiencies and high quality services. In an environment where for the first time forces face real cash deficits and face having to reduce police officer and support staff numbers whilst maintaining current performance levels the current finance delivery models requires new thinking.

While there a number of barriers to be overcome in achieving a best in class finance function, it won’t be long before such a decision becomes mandatory. Those who are ahead of the curve will inevitably find themselves in a stronger position.

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Lending Guidelines Change – The Future of 100% Financing, Sub-prime, and First-Time Homebuyers

You have likely seen the television news reports or have read the newspaper and know something about the demise of the sub-prime mortgage business.

By now, you, or someone you know, thought they were getting a mortgage, and then suddenly, without warning, were turned down for that loan, because the bank no longer offered that program.

You may have even seen “The Mortgage Lender Implode-O-Meter” that many of my colleagues have sent me on the website

You also know that this is being caused primarily by a record number of foreclosures as well as the highest percentage of people who are late on their mortgage in nearly four years.

As a result, nearly every mortgage lender in the country has dramatically changed its lending guidelines in the last 30 days, especially the sub-prime banks that decided to stay in business.

Many banks have made the decision to close. According to the Implode-O-Meter, this number is now at 39 as of today.

New Century, the third largest sub-prime lender in the U.S, is no longer accepting loan applications. They are on the verge of bankruptcy or closure, depending on the reports you read. Their stock, which had been at 51 in the past year, hit a low below 4. It dropped nearly 70% in one day.

You have probably dealt with Fremont and Aurora as well. Fremont is the second-largest independent U.S. mortgage lender. They recently closed their sub-prime division.

Aurora recently eliminated a very popular sub-prime program they had.

You may have even had a deal fall out of escrow because of it. The buyer, who was a slam dunk loan a month ago, today can’t qualify.

Why are these guidelines changing like this and so rapidly?

The mortgage business works like a river with a downhill stream. All of the water ends up in the same pool at the end of the river.

Nearly all mortgage loans originated everywhere end up being purchased by a handful of companies. This handful of companies purchase nearly all of the mortgage notes made in the U.S. These are large, institutional, Wall Street investment companies.

These investment companies buy mortgage notes because they have been highly profitable in the past few years. They were profitable because the market was vibrant. People made their payments on time and when they didn’t, they simply sold their property at a profit before they lost the home to foreclosure. Mortgage notes were lucrative and came with little risk.

The rewards were tremendous and nearly every large Wall Street institution from Morgan Stanley to Lehman Brothers to Goldman Sachs to Credit Suisse got in the game. Even General Motors owns two mortgage companies.

However, with foreclosure rates higher than ever and late payments also very high, these mortgages are no longer profitable for these Wall Street investors. In fact, they have become an albatross threatening to bring them down.

Sure, it’s great to own a $60,000 Note on a second mortgage where a guy pays you 11.000%. However, when he goes into default and you take back his home and he is upside down by $100,000 and you lose your entire $60,000 because you are in second position to the first mortgage note holder, it’s a first-class beating.

Some experts say these investors now potentially could lose billions of dollars. General Motors announced this week they are writing a $1 billion check to cover losses in their mortgage division. That’s billion with a “B.”

The biggest loser for these Wall Street investors has been sub-prime mortgage notes and second mortgage notes. Their research shows that these losses are mostly and directly related to first-time homebuyers and 100% financing.

So, these Wall Street investors have decided to fight back. They have collectively determined that second mortgage notes are the absolute riskiest and they are going to limit purchasing them. They have decided to only purchase the best notes. The ones with the least risk. The ones made to people who have some of their own money in the deal and/or only those with better credit.

They have determined that sub-prime notes are also not worth owning unless the borrower has a lot more of his own money in the property, so they are limiting buying those as well unless the borrower has a substantial down payment or a lot of equity on a refinance.

They have determined that notes for borrowers who state their income are far more likely to end up in foreclosure, so they are limiting those to only the better credit score borrowers.

They have determined that first-time homebuyers, without a down payment or a verifiable rental history or a very good credit score, are excessively risky, so they are limiting investing in those Notes as well.

So the mortgage companies that sell the Wall Street investors these Notes, including Countrywide, Option One, New Century, Fremont, Aurora, and nearly every other mortgage lender you or your broker deal with got put on notice from these Wall Street investors.

They were told, “Do business any way you deem necessary but just know that we no longer purchase risky notes, like those listed above.”

Without a place to sell these notes, these banks had to change their guidelines to only allow for notes they can sell and that’s where we are today.

OK, so what does this mean to you and me?

In the last few weeks, nearly all of the mortgage banks have eliminated stated income loan programs for credit scores under 660 that allow for 100% financing.

They want the buyers to have their own money in the deal as they believe that will make them less likely to be willing to lose their home.

If you do an 80/20 loan to cover 100% financing, the 20% second mortgage may be very difficult to obtain. It will be nearly impossible if your credit score is below 660 and you state your income.

If your credit score is less than 620, that makes you sub-prime to most lenders, so you will very likely need a minimum of a 5% down payment and probably more like 10-20%.

If you have to state your income, you should plan on at least a 5%-10% down payment if your credit score is not at least 660.

If you have to state your income, plan on a bank seriously considering your payment shock before approving you. Many new banking guidelines are limiting this to no more than two times your current payment. For example, if you pay $2000 today for your home or rental, it will be difficult, but not impossible, to find you a bank who will allow your new payment to be any higher than $4000.

If you are a first-time homebuyer, and you don’t rent from a professional management company, you should make sure you have cancelled checks to prove your last 12 month rental history and your credit score should be decent. If not, you are likely going to face a greater challenge and possibly a higher interest rate.

If your credit score is not at least 660, and you cannot fully disclose your income, you will find it very hard or very expensive to secure a 100% loan on a new home purchase or refinance.

When I say expensive, I mean if you are doing an 80/20 loan, and your credit score is not at least 660, and you have to state your income, plan on that last 20% costing you between 3-8% on that loan as a loan discount fee, if you can even find it.

If you buy a $300,000 house, and you are doing an 80/20, this means your first mortgage is $240,000 and your second mortgage is $60,000.

Based on these numbers, that second mortgage will cost you a discount fee between $1800 and $4800 just to get that second loan in additional closing costs.

Now this is still certainly less expensive than putting 5% down or $15,000 on this same home, but it does make it much more difficult for the first-time homebuyer and those with little to no money to put down.

Most banks limit seller contributions on 100% programs to 3% of the loan amount so those additional costs on the second mortgage will certainly mean you will need some cash out of pocket.

The sub-prime market, primarily for borrowers under 620 credit scores, is nearly dead today for higher loan to values. If you have between 5%-20% to put down, you should still be OK for now.

Here are some of the other things you can expect to see:

· The lighter your documentation (stated income, stated assets, etc), the higher your down payment and higher your rate.

· The lower your credit score, the higher your down payment, the higher your rate.

· More intense scrutiny from underwriters. They are being told to take their time and be extra careful about every loan they make. Many of them have been fired as a scapegoat for today’s high rate of delinquency. As they land at new companies, you can expect their lesson to be learned.

· The acceptable documentation needed for your loan will likely be more substantial and will need stronger third-party verification like income, employment, previous rental history, reserves, down payment, credit history and depth of credit including more and longer trade-lines.

· All investment loans will likely require 6-12 months in reserves.

· Plan on all loans requiring more reserves and tougher asset seasoning guidelines.

· Option ARM’s will likely only be available with more equity or much more down payment.

· Plan on loans costing your borrowers more on the front end. Banks are dramatically cutting back the Yield Spread Premiums and Rebates paid to brokers and bankers and they will likely pass some of this onto the borrower.

If you have been reading this newsletter for some time, you know that I am an OPTIMIST!!!!

So, what’s the good news here?

The GREAT news is that we still live in one of the most vibrant, incredible real estate markets in the HISTORY OF THE WORLD!!!

People are still moving here in droves and they are going to for many years to come.

In 1989, at the age of 23, I bought my first house. It was in South Shore, on West Lake Mead, at the base of a giant desert that was rumored to soon be a development called Summerlin. I was a first-time homebuyer. I made about $6/hr. working for a television station after graduating from college.

My soon-to-be wife and I found a house we loved for $136,000. That seemed like it was all the money in the world. It was at the time.

I got an 80% loan because that was all I could qualify for and I got a generous gift from my parents to help with the down payment. My interest rate was 12.000% and it was not interest-only.

How I made that payment each month was once featured on a segment of television show called “Unsolved Mysteries.”

The point is we found a way. Las Vegas exploded during those years, as it does today, with people “finding a way.”

There weren’t any interest-only’s or hybrid ARM’s or Option ARM’s or 100% financing for borrowers “one day out of BK.” You had a down payment or you didn’t get a house. You had decent credit or you rented until you could improve. Many lenders did FHA loans and nothing else.

Yet our city exploded. More so than any city in American history.

In my opinion, creative financing did not create the real estate explosion. The real estate explosion created creative financing. Wall Street wanted in and they did so by creating “something for everyone.”

I can remember the days, not that long ago, when I would do tons of FHA loans, that required 3% down payment, and loans that required mortgage insurance, and loans that didn’t go to Wall Street but went straight to “the agencies” like Fannie Mae and Freddie Mac and guess what? Those days are back.

Sure, it will take some time getting used to it and we will have to say “no” a few more times than we did in the past few years. We will talk to a lot more people, try and pre-qualify them, and then we will have to make that call all lenders hate to make. We will deliver the bad news that their dream of homeownership is not today. However, with some good guidance and solid consultation that dream should remain alive as someday it will happen.

And, yes, the timing is horrible when factored against what is already going on in the market with inflated inventory and fewer buyers, so sales and values will likely drop even further from previous years as a result.

However, and this is the important thing to remember, there will still be thousands of home sales each month and more sales here than in most other cities.

I was talking about this subject to one of my reps at one of the biggest mortgage investors in the U.S. He told me his company went through the archives and the lending guidelines are now very similar today to how they were in 2000.

In 2000, a 30-year fixed rate mortgage averaged 7.75%, yet it was the third-best performing year for home sales in the previous 37, according to the U.S. Census Bureau, and Clark County saw its population grow over 300% from 1990. Even with higher interest rates than today and similar lending guidelines, people were buying houses and getting loans.

One more item of optimism for you. 100% financing still exists and likely will exist for borrowers with credit scores over 620 if they can prove their income and 660 for those who state their income.

Please look at the chart below. This is the “National Distribution of FICO Scores” table as found on This breaks down Americans by their credit scores.

800+………….. 13%

750-799………. 27%

700-749………. 18%

650-699………. 15%

600-649………. 12%

550-599………. 8%

500-549………. 5%

under 499…….. 2%

As you can see, nearly six out of 10 have a 700 score or higher and nearly three out of every four Americans have a score 650 or higher. It doesn’t take much work for a seasoned mortgage professional to consult with a 650 on credit clean-up issues to get them over the 660 mark.

And, finally there are still those agency loans like FHA (loan limit now $304,000 in Clark County) and some very exciting Fannie Mae-backed loans that allow for 100% financing for borrowers with less than perfect credit and lower income and the rates are fantastic!

I just got a single mom, school teacher approved this week on 100% financing with a 626 credit score and a debt to income ratio of 55% with an interest rate of 6.000% for a 30 year fixed.

No, it’s not interest-only, and yes, she has to pay mortgage insurance, but last week she was an innocent victim of a Wall Street-backed bank that decided she was too risky. In the next two weeks she will be a proud first-time buyer with a home to raise her kids.

My incredible English professor, Mr. Harrington at Clark High School, once told me to always avoid clichés when writing.

But you know what? Where there’s a will, there’s a way. And, we, real estate professionals, will “will” our way through this, like we always do.

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