Have you tried getting a home mortgage loan closed in the Los Angeles area recently? Today, going through the loan process with a bank is like visiting your dentist for a tooth extraction. If you’re having trouble with mortgage lenders these days, you are not alone.

I’ve been a real estate lending officer in Los Angeles for more than 25 years, and I’ve never seen it this difficult to obtain financing. The pendulum has swung in completely the opposite direction from the “easy money” days, five or so years ago, to an animal I’ve not seen before.

Banks are running scared now. They want to document loan files from A to Z. Lenders are making it so difficult in Los Angeles to obtain mortgages that it’s no wonder interest rates have remained very low and housing stalled since very few can obtain funds in the highly restrictive market. “You can have all the 4 percent money you want, Mr. Borrower,” say banks, “but unfortunately we’re not going to lend you any.”

Case in point: I have a client in Los Angeles with more than $5 million in liquid funds, a $200,000 annual income, a FICO credit score more than 800 (considered A-plus credit) who recently requested a $406,000 loan on a home valued at $1.7 million – yet the bank gave us fits. The delays and drama posed by the L.A.-area underwriting team would have been unheard of several years ago.

“Why do you need to see page 6 of the bank statement?” I asked the lender’s representative. “It’s completely blank and says ‘Page intentionally left blank’ on it.”

“We need it for the loan file and the loan can’t fund until the underwriter reviews it,” said the bank’s rep.

“Well, my client has thrown out page 6 because it was blank and meaningless,” I said. “Now what do we do?”

“You’ll need to get me a copy of page 6 – even though it’s meaningless,” said the lender.

“But the loan we’re getting and the bank account are both with you guys,” I said. “Can’t you just check your own computer and print the page yourself?”

“It’s a different department and we’re not hooked up to their system,” said the lender. “It doesn’t work that way. You’ll need to have your client request a copy of page 6 from them directly, and provide it to us. Sorry.”

“If you’re not going to make this loan you might as well get out of the business because I can’t find a better loan customer for you,” I said in complete frustration.

Finally, after four months of going back and forth with underwriting on this simple and straightforward home refinance, the loan closed.

Not consumer friendly

Today, it’s more than apparent banks providing real estate loans are not consumer-friendly. It seems as though they mistrust loan applicants during the entire loan process until proven otherwise. Welcome to the new rules and the new game in town. The need to scrutinize and obtain every last page and document – no matter how meaningless – is severely hampering any real estate recovery in Southern California and nationwide.

Lenders customarily package and sell their originated loans to Fannie Mae and Freddie Mac. These two big institutions are placing onerous restrictions on lenders. That burden is carried down through the food chain from banks to mortgage brokers to consumers and is curbing commerce.

Today, in order for money to flow efficiently and for Southern California housing to get back on track, sensible lending and underwriting guidelines need to be restored. There’s no need for any borrower to produce a meaningless sixth page of a bank statement to close a loan. Bank paranoia needs to be removed from the lending equation – and soon.

And, may I suggest, if you’re contemplating a tooth extraction or a home refinance, opt for the extraction because the pain is over much quicker.

Ted Lux is author of the investment book “Exposing the Wheel Spin on Wall Street.” He lives in Playa del Rey.