A gentleman has two mortgages on the same piece of property. The combined monthly payments are right around $2,400 and the combined balance on the mortgages is under $250,000. The property is worth well over $300,000.
One day our friend decides maybe he should refinance his house since interest rates are at a historic low. He calls up a company and gives them his information. The nice man on the phone informs the protagonist of our tale that his debt to income ratio is too high but that if he did qualify his payments would drop to $1,700 per month.
 |
| Umm... |
“Why yes,” says the guy on the phone. “If only you earned more money you could pay less.”
So our hero says, “Well, I get an allowance from the government and my wife earns money too!”
 |
| Err... |
“But they are income.”
“Why yes,” says the guy on the phone. “But that income doesn’t count as income.”
“Well, the property is worth more than I want to borrow,” says the confused customer. “Doesn’t that help?”
 |
| Huh!? |
And so our dejected and rejected would-be borrower hangs up the phone. “If only I earned too little, had bad credit, and wanted a bigger house,” he thought, “then the government would force them to finance me.”
The End
Author's note -
I admit this story sounds a little farfetched until you realize that it’s about me. I was just told all of these things. I was actually told that if I earned $1,500 more a month I would qualify even though he wouldn’t count $2,500+ of my monthly household income.
I admit this story sounds a little farfetched until you realize that it’s about me. I was just told all of these things. I was actually told that if I earned $1,500 more a month I would qualify even though he wouldn’t count $2,500+ of my monthly household income.
I can’t think of a better illustration of the effects of government over-regulation on the economy. While houses are still be repossessed at breakneck speed across the country, I wonder to myself who is protecting the responsible homeowners?
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This sounds like the same conversations we had with Navy Federal FCU about 2 months ago. We have ZERO debt except our mortgage, 800+ credit scores, our home is worth $300k+ more than we owe on it but that magic debt to income converstation came up. We earn over $7k a month and only pay out $2k in mortgage but our debt to income is too high. Must be using Obama math!
ReplyDeleteAll I can say is, qualifying to refinance doesn't go much better. My bank recently called me (I had not contacted them) to tell me that I "qualified" to refinance my home. I was invited to meet with a mortgage specialist whose office was lined with certificates & awards attesting to her experience & expertise. She asked me to bring only two things with me: My 2009 tax return, & proof that I had filed for an extension for 2010. And so it began.
ReplyDelete• Week 1: The underwriters refused the proof of extension. They wanted proof on IRS letterhead. So I had to drive 15 miles to the nearest IRS office to get the proof & submit it to the bank. Then the bank deducted $425 from my checking account for an appraisal. I pointed out that it did not matter how much the house appraised for, since it was already the collateral for a mortgage loan they held & would continue to the be the collateral if this loan application were turned down, it’s just that my payments would continue to be higher for the same outstanding loan amount. I was told that I needed to have the property appraised & that I was responsible for paying for the appraisal.
• Week 2: More than 4 business days after the money was deducted from my account I was finally contacted by an appraiser to make an appointment for the appraisal – for the next week. And now the underwriters wanted a copy of my 2008 tax return. I made copies & sent them in.
• Week 3: The property was appraised at significantly more than the outstanding mortgage. Now the underwriters wanted a copy of my consulting contract. I copied the 80-page contract & submitted it.
• Week 4: They could not proceed with the application because I needed to sign a document giving them permission to confirm that the SSN I had provided was, in fact, MY social security number. I began laughing so hard I nearly passed out. When I could breathe again, I pointed out that I had opened my first account with the bank in 1977 & that account is still open today. Since that time, I have had a checking account, savings account, money market accounts, CDs, a bank Visa card, two auto loans, & a mortgage with this bank. The bank has been reporting my interest income to the IRS for 34 YEARS! And now they were holding up my refinancing application in order to confirm my social security number? And why hadn’t I been asked to sign this on Day 1 if they knew they were going to need it? I was told that if I did not sign the form my application would be denied. I signed the form.
• Week 5: The underwriters needed a profit & loss statement for my home business for 2010. They sent me two templates. Both were unusable.
• Week 6: Not a word.
• Week 7: The loan is approved. Now I had to sign all the paperwork, including 3 more copies of the form to confirm my social security number & an attestation that I have never been known by any of the following 35 names & did not know anyone with those names. The list included 34 misspellings of my name & the 35th name on the list was that of my former husband. I said I could not attest to not knowing this individual. The title specialist left the room & I sat there for 20 minutes while he & other people in the office figured out what to do next. Finally I was asked to write out exactly how I knew this person & we moved on.
• Week 8: On the same day I received proof that the new mortgage loan had been recorded with the county and a letter that my bank has sold the mortgage to Fannie Mae. EEEEEEK!
With math like this going on with the banks, is it any wonder our economy is still foundering? Hell, is it any wonder it tanked in the first place?
ReplyDeleteClearly, the solution is to give the banks more money from the taxpayers. I don't understand why you all can't see that.
ReplyDeleteSarcastically yours,
Jeff