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 ...
Exactly what happened to me. We are empty nesters and downsizing. I had a signed Purchase Agreement at $248K and my house appraised for $213K. The County Assessor had the property at $244K. The appraisal challenges have to do with the comps. The appraisers have to use 2 comps in your neighborhood. They don't have to be comparable houses, just have to be in your neighborhood, and in our cases a different and lesser desirable school district. Given the current rules, I don't see how real estate can ever appreciate.
No, read his bio line at the bottom of the article—it’s another Stephen Moore.
Sorry—I take that back.
Incredibly, it does seem to be him. Embarrassingly (for him) too.
He must have investments elsewhere that he could use to cover the purchase?
Just hard to believe and the harder to fathom without more detail.
Tax assessed value has absolutely nothing to do with current market or appraisal values.
What I’m seeing is that the rules that are in place now
force the banks to give loans to those whose financials show they can’t pay it back,
while prohibiting them from loaning to investors who have
a strong financial track record.
Excellent answer!
I would go further, take the 25%, pay cash and steal a foreclosure...
My credit score never seems to be affected as they increase my credit limits, although I’ve heard that can be a factor.
What does immediately lower the score is if I charge a couple thousand more in a month than normal. Even though I pay the bill in full every month, the credit score sees that my debt has gone up when it takes its snapshot, and lowers my score in accordance. So it seems like having a large income may not help your score as much as having a high debt hurts it.
This is why they say you should pay off and stop using your credit cards a couple months before you apply for a loan. Get that debt snapshot down and it helps your score.
Maybe with a 30 year. I will not do more than 20 year and prefer 15 year mortgages.
Maybe with a 30 year. I will not do more than 20 year and prefer 15 year mortgages.
I will officially predict to you that within a few years the use of credit scores will be banned, after they have been sufficiently vilified as “racist”.
I will officially predict to you that within a few years the use of credit scores will be banned, after they have been sufficiently vilified as “racist”.
It has been done before.
-PJ
Just curious—why wouldn’t you take the 30, with its greater flexibility, but pay it off in 15 or 20, since that’s your preference?
We’re selling a house to a veteran and it has taken >2.5 months for the VA to approve what his lender says should be done in 5 days. Still waiting...
“You can’t really separate paying back the loan and the banks making money from you. They go hand-in-hand if you reliably pay your bill on a loan.”
Sure you can. Banks want people to live in debt. Its even written into tax code. A bank carries that loan to you as an asset. This has a profound impact on the way banks operate.
But, on top of that, they probably have no problem working 18 hour days.
Easier said then done. It takes real discipline to pre-pay a mortgage and I admire those who can do that.
Okay, thanks.
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