Posted on 08/24/2015 6:04:06 AM PDT by SeekAndFind
Last month I bought a house in Potomac, Md., a trade up on my current home, and was shocked to learn in the ensuing weeks that I couldn’t get a mortgage loan. First, I went to PNC bank. Then Wells Fargo. Then another. Denied. Denied. Denied.
No, I don’t feel entitled to a loan, and the banks have every right not to lend me money. But my tale of woe tells a broader tale of what is going on in the lending industry these days.
All the bankers told me the same thing: “Steve, if you’d walked in our bank eight years ago with this mortgage application, we would have rubber stamped it in five minutes and you would have walked out with a bag of money.” But those were the go-go days of the real estate frenzy when people who worked at McDonald’s could walk into a Countrywide and get a $600,000 mortgage. Back then underwriting standards were tossed out the window.
Now, thanks in part to new federal regulations like Dodd Frank with its anti-predatory lending rules, the pendulum has swung to the other extreme and underwriting standards (for those without federal insurance) are absurdly tight. Here we are with the lowest interest rates in 50 years, but many businesses and aspiring homeowners can’t qualify. Water, water everywhere and not a drop to drink.
My situation was doubly frustrating because I’m making a 25 percent down payment on the house. Researchers have examined huge samples of the portfolio of defaulted loans during the 2007-09 housing crisis. Virtually all of the defaulted loans had a low down payment with many less than 5 percent down thanks to government “affordable housing” mandates.
(Excerpt) Read more at washingtontimes.com ...
Do we really want to bring those days back?
I make a six figure income and I would never take out a $600,000 mortgage. It would cripple me. It's irresponsible to make loans that can't be paid back.
Ah yes, “rubber-stamped” mortgages, because that worked out so well.
Assuming you did not pay cash, how did you buy a house last month without qualifying for a mortgage?
My first question when somebody I know says basically the same thing is “Who did you vote for this last election?”. Half have said the great zero. No sympathy for them here.
Welcome to the Zero-bama economy. If you have an income, you are only qualified to lend $$ to the indigent, not to get a mortgage for yourself.
This will change in 2017.
First answer to the headline -
because you forgot to check one of the “minority” boxes on the application, dummass!
The dude bought a house at a level that he probably knew he wasn’t regularly qualified for (or he wouldn’t be offering to put more than 20% down) and now he’s screaming about it.
He acknowledges that banks are lending to borderline borrowers, so the real problem isn’t in his two late credit card payments, but in his loan to debt, income, and net worth ratios—which he’s not sharing with us—and in his overconfidence to buy up, without prequalification, at least, at a level that traditional banks don’t want to keep in their own portfolio.
Just checked a while back on a real estate investment loan.
The local bank said they’d love to give us the loan based on our financials and credit score,
but federal regulations prohibited it.
Put a deposit down, at least, now is at risk of losing it, and wants to blame someone else, no doubt.
When we traded up, our down payment was in excess of 40% of the price.
We could have traded up to a much bigger house, but we wanted to be able to sleep at night.
Did it ever occur to him he should not borrow what he is requested?
There shouldn’t be rubber stamping but it’s increasingly difficult to get good loans even for responsible people. We tried to buy an investment house when the market was down and didn’t qualify. Partly because I am self employed. Despite the fact that I can control my destiny much more than an employee who can be fired on a whim I am apparently risky. We have outdated standards and rules that don’t fit today’s world. Someone putting down 25% on safe real estate purchase shouldn’t have much of a problem.
RE: My first question when somebody I know says basically the same thing is “Who did you vote for this last election?”.
I know the author and read his articles regularly. He is a proponent of supply side economics and will NEVER VOTE for a Democrat (unless he is Thomas Jefferson ).
Banks are more than happy to loan money to people who don’t really need the loan because of the value of their other assets.
Exactly. He bought nothing, rather he signed a bona fide offer, pending financing. Semantics, semantics everywhere, and not a correct thought conveyed.
Maybe he means he put a contract on a new house. Some people I know have had buyers go into contract, and then find they couldn’t get a loan or couldn’t sell their previous residence, so it’s back to square one for the seller.
As for the author, perhaps his inability to get a loan is a sign that he doesn’t really need to “trade up.” I’m very puzzled by people who change houses when they don’t absolutely have to - because they’re moving to a different state, for example.
From the article:
“The main reason I was denied a loan was because of a below-average credit score”
No need to read any further
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