The most important and least quantifiable characteristic of a loan is the borrower’s character.  This is where loan officers get in trouble, because some of us place more emphasis on the paper in front of us than the individual in the chair. 

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A borrower’s income sources are similar to a football team’s style of offense. We have applicants who are “three yards and a cloud of dust,” in that they earn a salary from an employer and are likely to continue at a predictable salary level.  We have other applicants who run some variation of a high-risk, high-reward spread offense, such as farming or owning their own business, which has the potential to “score” a nice income. The disadvantage is the uncertainty of adverse conditions that may or may not be within the borrower’s control.

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Unfortunately, it seems, too many Americans were able to buy homes in recent years without any self-discipline or training, and today we are seeing the results.

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