TheMReport — News and strategies for the evolving mortgage marketplace.
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TH E M R EP O RT | 27 FEATURE FEATURE W e all remember the housing crisis. We also all remember its aftermath. Legislators, regulators, and the lending community combined forces to create new rules that mitigated the risk of another mortgage industry meltdown. Tightened regulations and increased underwriting standards from banks and other large financial insti- tutions have helped make mortgage lending far safer than it was a decade ago. However, what we (or anyone else) could not foresee was a huge structural change to the U.S. economy as a whole. Today, the concept of the "gig economy" is commonplace. Millions of workers work now as freelancers across any number of industries. Changing technologies and personal career pursuits have changed employment dynamics throughout the country. And these types of workers are almost always shut out from obtaining a mortgage from a traditional lender. Good Clients Get Rejected L et's take a case study featuring a 30-year-old woman named Sarah. She spent her first few years after college working as a computer coder at a typical nine-to-five office, which she quickly grew to despise. She wanted flexibility in her schedule during the day to travel and, if need be, move. Sarah decided to use her skills as a computer coder to become an independent contractor. She worked for a variety of companies and firms for contract-length projects that never lasted more than a few months at a time. She could manage other pursuits like teach- ing a yoga class during the day. And she also made great money. Along the way, she started to date Jake. Jake also lived this sort of lifestyle. He worked primarily as a freelance copywriter, but also put in time at his friend's new dog-sitting business and supplemented his income by driving for a rideshare company on weekends. He, too, made a very respectable income. Sarah and Jake got married. They wanted to have more room than an apartment allowed and also understood the benefits of owning a home. So they started looking for a house in their area. But along the way, the bank they used denied them a mortgage. Sarah and Jake's decision to avoid working in a traditional office made them happier with their careers and future prospects. They loved the autonomy and freedom that gig economy work provided. With a combined income over six figures, Sarah and Jake should be ideal candidates to obtain a mortgage. Only their bank rejected them. Gig economy workers are often shut out from getting a mortgage. Learn how lenders can support this demographic while maintaining strong underwriting standards. By Tom Hutchens Hustle