Although nationwide mortgage denials are at an all-time low since the housing crisis, homebuyers are most likely not to get loans in Miami, Orlando and other Florida cities, a new report found.
The report by Lending Tree, an online lending marketplace, named Miami, Orlando, Tampa and Jacksonville as the top 4 cities with the highest denial rates. In Orlando, more than 1 in 10 people who applied for a loan were denied. Having bad credit and too much debt were the main reasons for denials.
Also in the top 10 for high denial rates were Detroit, Michigan; Birmingham, Alabama; Houston, Texas; San Jose, California; New York City; and San Antonio, Texas. The metro areas where homebuyers were most likely to be approved were Minneapolis, Minnesota; Salt Lake City, Utah; and Kansas City, Missouri.
Tendayi Kapfidze, Lending Tree’s chief economist, said the report doesn’t necessarily mean it’s harder to get a mortgage in Florida, and there may be other factors at play. In Orlando, he said the fact that for years wages have lagged behind home values could be a factor in nearly 11% of mortgage loan applications being denied.
The report also found that minorities are disproportionately more likely to get denied for loans, with 17% of African-Americans being denied loans versus 8% of white applicants.
Daniel Betancourt, an agent with ReMAX Town Centre in Orlando, was surprised by the report’s findings and speculated that the high rate of denials could be because Florida was one of the hardest-hit states during the financial crisis. Since then the state has also seen a faster home value appreciation than other parts of the country, with the current median home value around $250,000.
Betancourt also hypothesized that the number of vacation properties, which have more stringent loan requirements, and foreign nationals buying property in the state also could be driving the numbers.
The sheer number of people moving to Central Florida could also be a factor. About 1,500 people move to Central Florida every week.
Betancourt said he hasn’t had any problems with clients getting approved, and pointed out that lending standards have actually loosened In the last few years.
“For any buyer who’s looking to purchase in Florida, this report shouldn’t negatively impact their decision to pursue a home in Florida, because most of the credit requirements are established nationally by Fannie Mae and the Federal Housing Administration, not by our state,” he said.
Brad Siebert, branch manager for The Mortgage Firm in Maitland said he was “shocked” by the report.
“I will tell you that it’s been years since I submitted a loan that hasn’t gotten approved,” he said. ” I’ve had more loans approved every year going back since I can remember.
“I don’t answer the phone and say, ‘Oh boy, it’s a Florida loan.'”
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