Jeffrey J. Miller remembers the heady days of the housing boom, when practically all you had to do to get a home loan was state your income and sign your name.
Like thousands of others across the Sacramento region, Miller took advantage of the easy credit. He refinanced his property in Old Folsom and withdrew extra cash "like an ATM" to fix up the three houses on the lot, including his home and two rentals, he said.
Then he got cancer. Miller, an independent financial adviser and insurance salesman, had to curtail his frenetic work schedule, and his income took a hit. His $2,700 monthly mortgage payment became a heavy burden.
Miller said that when he looked into refinancing at today's record-low interest rates, lenders turned him down again and again. Even a friend who was a mortgage broker thought his case was hopeless, he said.
It was a hard lesson in the way lending practices have changed. Credit, once so easy to obtain, has become difficult to secure for anyone with financial strikes against them.
Home loans plummeted from their peak in 2005, when there were almost 72,500 conventional first mortgages and nearly 100,000 refinance loans in the Sacramento region, to about 13,000 conventional loans and 32,000 refinancings at the bottom of the bust in 2011, according to federal mortgage reports.
For Miller, the strikes included being self-employed and owing far more than his property was worth. "I was underwater," he said. "I had everything going against me."
Today, the lending market is healing in large part because rising home prices mean fewer people owe more than their houses are worth. As they regain equity, they regain borrowing power. Lenders report a rise in the number of home equity loans they're making in the Sacramento region. First mortgages are also on the uptick.
Sandy Thompson, senior vice president for U.S. Bank in Sacramento, said the number of home equity lines of credit issued by the bank in the region increased by 17 percent in 2012 compared with 2011. That momentum has continued into 2013, she said.
Golden 1 Credit Union said it also has experienced a jump in the number of equity loans and refinancings as homeowners discover "where they might have been upside down, the market has improved sufficiently that they now have equity they can borrow against," said Senior Vice President Scott Ingram.
"For the first three months of 2013, we are seeing the rate of home loan applications growing about 5 percent each month," Ingram said in an email. "For home equity, in the first quarter of this year, applications are up 20 percent when compared to the same period last year."
Still, lenders warn that would-be borrowers with any wrinkles in their applications should be ready for a thorough going-over. Standards remain much tighter than they were during the housing bubble.
"I think it's important to realize that when you go to obtain a mortgage loan, it's going to be invasive," said Dan Starelli, the senior vice president at Umpqua Bank who oversees lending for California and Nevada. These days, loan officers will make sure applicants have the ability to repay loans, he said.
He recommends that anyone intending to buy get a signed letter of pre-approval from their lender. That involves a more stringent review than simple letters of pre-qualification.
For those who pass the test, the ultimate outcome could be a 30-year fixed-rate mortgage rate of under 4 percent rates not seen since 30-year mortgages became common after World War II.
Those with trouble-free pasts and good credit scores may still find themselves cruising through the process.
Steve Hronek, for instance, said he had little trouble getting a mortgage from Umpqua Bank to buy his first home in West Sacramento's Ironworks subdivision of loft-style townhomes. A trucking manager in Stockton, he filled out the application online, traded phone calls with a bank employee and sent in recent pay stubs.
He got a 30-year mortgage with an interest rate of 3.75 percent and bought his newly built home for $260,000.
"It was just smooth sailing," Hronek said. "I didn't see any hiccups."
For others it's a series of headaches.
Underwriters may require bank statements, pay stubs, lists of monthly debts, and explanations of late payments that lower credit scores.
In Miller's case, he had a number of hurdles to overcome. He had an unpaid medical bill of $89 on his credit record, which he said he had paid but which nevertheless lowered his otherwise strong credit score. He had three houses on his property, which threw lenders for a loop. And he owed about $100,000 more than his property was worth.
What's more, some mortgage brokers wrongly told him that his original loan was not owned by Fannie Mae or Freddie Mac and he was therefore ineligible for the federal HARP program, which allows many underwater borrowers to refinance.
Eventually he connected with Umpqua's Jeff Stevens, a lending manager whom he credits for working through the obstacles and securing a HARP refinance loan for him in March.
"He would keep running into roadblocks but would go the extra mile for me and say 'let's try it this way,' " Miller recalls. "I was amazed."
Miller said his faith allowed him to fight non-Hodgkins lymphoma, now in remission, and return to his business. Stevens, at Umpqua, helped him stay afloat financially, he said.
"Umpqua Bank saved me $980 a month in my mortgage payment," Miller said. "I consider it a life-changing event if you can save $1,000 a month."
To speed refinancing, the Golden 1 Credit Union recommends that borrowers gather the following information:
Personal information such as years on job and years at current residence
Proof of homeowners insurance
Property tax bills
Call The Bee's Hudson Sangree, (916) 321-1191.