Focus on Real Estate


Mortgage lending stays strong in the Flathead


By Shelley Ridenour
Flathead Business Journal

There’s still money to loan to people who want to buy homes in Flathead County, local bankers and credit union officials say, but the lending process today is more difficult than it has been in the past.
The average consumer who is thinking about buying a house seems to be under the impression that “no one is lending,” Karin Henion, senior vice president of Flathead Bank in Bigfork said. Most people know that some rules and requirements for obtaining a loan have changed, she said, but few people are informed about those changes.
“People should check with local lenders,” Henion said. “Don’t assume you can’t be helped. There are lots of good programs.”
There definitely have been changes to the lending process, said Mike Smith, real estate manager at Glacier Bank in Kalispell.
Perhaps the biggest change has occurred in down payments. While there are still loan programs that require no down payment to buy a house, those programs are for people who meet specific criteria. People getting a conventional home loan need a down payment today, Smith said, and it’s probably larger than what used to be required.
Keith Valentine, vice president of real estate at Three Rivers Bank in Kalispell, said today’s market is “the hardest lending environment I’ve ever been in.
“But that doesn’t mean we still aren’t putting deals out there,” Valentine said. “We have good mortgage volume and it seems no matter how much red tape there is, we can cut through it.”
While there are “a ton” of loan programs available today, “they are all different and are changing all the time,” Valentine said.
“Any of the weird [lending programs] are gone because they were abused,” Henion said. “All lenders now have to deal with all the fraud that was perpetrated. We do more due diligence and there is more paperwork involved for borrowers.”
Today’s home buyer must have an income level that qualifies them to buy a particular house, Henion said. In the past, people were allowed to borrow an amount equal to 55 percent of their income to buy a home. That ceiling has dropped, she said. Depending on the lending source, it’s almost never higher than 45 percent and is down to 40 percent for some loan programs.
People used to be able to get exceptions to their debt-to-income ratio, but those days largely are gone, Henion said.
The debt-to-income ratio changed mostly because people couldn’t afford to make their house payments and were losing their houses, she said.

People who apply for a home loan today are also subject to closer scrutiny than they may have been in the past — especially anyone asking to borrow a large amount of money to buy properties that cost more than $500,000, Smith said. Those customers usually need a much higher down-payment percentage — in the 20 percent range, a “great credit” score and cash savings equal to six to 12 months of loan payments, Smith said.
The U.S. Department of Agriculture’s Rural Development division operates a loan program for lenders who qualify. No down payment is required. That’s an especially good program for first-time home buyers, Smith said, and for people who want to upgrade into a larger, more expensive house. Income thresholds apply to loan applicants. Rural Development officials also team up with programs like NeighborWorks Montana, operated by Community Action Partnership, which caters to first-time home buyers.
There have been increases in the percentage amounts required for mortgage insurance on Rural Development loans, though, Henion said, which ends up increasing the cost to borrowers.
Rural Development also has loans for people who want to refinance their existing house loans, Valentine said, but that program hasn’t been funded yet this year. He’s had clients qualified for a refinance through that program since September, but the continuing resolution, which funds the federal government until Congress approves a budget, doesn’t have money for the refinance sector of Rural Development loans.
The Veterans Administration also offers loans with no down payment to qualifying veterans.
Federal Housing Administration loans now require a down payment equal to 3.5 percent of a loan, Smith said.
Connie Whittaker, chief lending officer at Park Side Federal Credit Union in Whitefish, pointed out that loans from credit unions don’t have origination or closing costs associated with them, saving the borrowers some money. And the loan process at the credit union requires less paperwork, she said.
Real-estate lending remains strong at her institution, Whittaker said. “We’re easy to deal with.”
The lenders all point out that with today’s record-low interest rates, it’s a good time to buy. But, house hunters need “to be comfortable with their employment situation,” before contemplating a house purchase, Smith said.
At some point, interest rates are likely to again increase, Smith said, “and when it happens, it will be quick.”
The housing inventory in Flathead County is good today, too, allowing buyers to negotiate prices and offering them a large selection of houses to choose from, all three financial institution officials pointed out.
Henion acknowledges there are people who can’t qualify for loans, including people who have lost their jobs or who have a new job that pays less than they used to earn.
Likewise, some people aren’t able to refinance home loans because their property value has decreased too much, she said.
A big issue that lenders face today, Valentine said, is that appraisals are coming in lower than homeowners who want to sell are willing to sell for. He attributes that to the fact that many of the comparable sales that are used in determining appraisal value are based on bank-owned houses or houses sold via a short sale. Those sales are usually for lesser amounts than the property would have sold for otherwise.
“But there’s nothing that can be done about that if that’s what is that market sector or neighborhood,” Valentine said.

Reporter Shelley Ridenour may be reached at 758-4439 or by e-mail at

Last Updated
Feb 24, 2020
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