Although I’m a fan of free enterprise, America really doesn’t have a banking system. I’m trying to buy a house and I have excellent credit, 15% to put down and excellent documentation. I’ve borrowed and repaid millions of dollars in my life but the lending world has gone bizarre.
First, I’m probably going to end up with a lender that has a lower net worth than I do who is going to lend me money they borrowed from my taxes, to give me a loan that I’ll have to buy insurance to cover, and they are paying nothing in interest for. I’d rather borrow money from the government than put up with the crap I’ve been dealing with. I’m no fan of socialism, but this is hardly capitalism. It’s just plain insanity!
Anyone else having problems getting a home loan? Got any tips and tricks?
#1 please take a permanent red marker and mark the errors on your screen so we can fix them.
Try a credit union, especially a military or civilian government one. You can often join through a family connection even if you aren’t a qualifying employee.
The big problem is that many of the previous organizations that were writing mortgages were just planning on selling securities based on pools of mortgages. These securities, contrary to conventional wisdom, are still easily bought and sold. The big banks just don’t like the prices that MBS securities are fetching these days. They also don’t want to go into the business of, um, banking.
The conventional wisdom is wrong also that banks are holding onto their capital in case of harder times ahead. It is more the mindset that simply taking deposits and making loans is too boring and not high enough margin.
I think that there really should be a firm line between trading organizations and lending/deposit taking organizations. This line was erased when the Glass-Steagall restrictions were dropped. I would be very surprised if these restrictions are not put back in place. Once they are banks will be back in the business of lending.
I feel your pain, I have near perfect credit, but buying a new car has been, well, weird. Some banks were no problem, but there were a few that wanted to put me through the ringer for a mid-size car, but strangely would have given me the rate I wanted if I had gotten a larger loan on the big gas sucking SUV my wife wanted. It strikes me as odd, that the higher risk loan was the easier one to get, with the fewest strings attached.
Note: I ended up going with the dealer instead of the bank anyway, they offered zero interest….
Aside from ideological ignoramuses already chiming in – if you can come up with a 700 credit score – not unreasonable – just about every community bank I know of + a couple of smart chain stores like Wells Fargo aren’t going to turn you away.
But, then I live in a state with one of the lowest % of foreclosures for the same reasons quoted in the first paragraph.
Marc
I think one of your problems is you only have 15%. Try 20% and you might have a better chance.
Umm, get rid of the Fed. That is at the bottom of our current crisis.
I don’t understand your problem. I just (2 weeks ago) got a first time home owners mortgage for almost $500,000 by only putting 5% down with no additional assets other than a four year old car.
Oh I do understand, I’m in Canada.
#3, a lot of people get taught macro the same way they get taught micro – that there is one theory and model that can explain all; which is unfortunate and absolutely absurd.
If you haven’t already, I’d recommend reading some Hayak as well. The Fatal Conceit is a good point of entry, as it’s mostly philosophical and relatively short.
Try to declare bankruptcy from a government backed loan! Not going to happen. You enter into indentured servitude to the government. They will “garnish” your wages down to almost poverty, regardless of what you make. You can’t leave the country.
As more people enter into this category and can’t find work, the government may dictate that you work on some Democrat’s farm for free. You won’t be able to complain about the whippings and stocks.
I got a loan with 20% down for 4x my annual salary. My credit score is 790, my wife’s is 805. It was at a regional bank, not a national one.
I am sure I could get a mortgage for something but why. We own three properties with no mortgage now and I just told a dealer I wanted a new travel trailer and stopped on my home tonight with it. 100% financing.
Don’t have any idea what my score is and I have never cared. If that changes I’ll know who to blame….Obomba.
No doubt the loan industry is topsy turvy right now given the uncertainty, job cuts, new laws, bailouts, etc.
But who said the mortgage industry was capitalist before the recent collapse? Government was meddling beyond basic oversight for a long time and can be accused of playing a part in it’s demise.
What you see now is a vacuum and confusion as powerful and wealthy forces prepare for the next power grab. Forget all rationality.
Just bought a car (Credit Union) and got pre-qualified kfor a mortgage (Wells Fargo).
I live in western NY state.
I more had to get nasty to keep people from sending me more credit cards.
One is bad enough and one click buying is dangerous.
You’d do better with 20%, these days they seem to prefer that with good documentation. Anything below that and they will ask for a lot more info.
My partner and I put up 20% and had no real problems with my bank other than rates jacking up in the course of making our decision. We’re still getting a mortgage that is 1.5% below the mortgage I dumped five years ago, and dropping our combined rent by 3/4’s.
I think everyone feels your pain. Remember the liar loans of just a few short years ago. The reaction was a closing of credit, and I know, it is the foxes that are guarding the hen house.
But, your experience is not typical, and I know that there are many people out there borrowing money for homes with as little as 3.5% down. And yes, you do need mortgage insurance, and yes, you do need to pay for it. Putting less than 20% down started this mess, lets be glad someone is watching the hen house, even if it is the fox.
Why on earth would you want to buy a house now anyway? ARE YOU INSANE?
Prices will drop in half over the next 2-3 years.
Mark my words…
http://www.globalresearch.ca/index.php?context=va&aid=13283
Housing Bubble Smackdown: Bigger Crash Ahead/b>
Mike Whitney
Global Research.ca
Tue, 21 Apr 2009 23:45 UTC
Huge “shadow inventory”
Due to the lifting of the foreclosure moratorium at the end of March, the downward slide in housing prices is gaining speed. The moratorium was initiated in January to give Obama’s anti-foreclosure program—which is a combination of mortgage modifications and refinancing—a chance to succeed. The goal of the plan was to keep up to 9 million struggling homeowners in their homes, but it’s clear now that the program will fall well-short of its objective.
In March, housing prices accelerated on the downside indicating bigger adjustments dead-ahead. Trend-lines are steeper now than ever before–nearly perpendicular. Housing prices are not falling, they’re crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 MILLION MORE FORECLOSURES BETWEEN NOW AND 2011. It’s a disaster bigger than Katrina. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes. There’s nothing Obama can do to make them stay. Worse still, only 30 percent of foreclosures have been relisted for sale suggesting more hanky-panky at the banks. Where have the houses gone? Have they simply vanished?
600,000 “Dissappeared Homes?”
Here’s a excerpt from the SF Gate explaining the mystery:
“Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”
In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity – only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as “shadow inventory.” (“Banks aren’t Selling Many Foreclosed Homes” SF Gate)
If regulators were deployed to the banks that are keeping foreclosed homes off the market, they would probably find that the banks are actually servicing the mortgages on a monthly basis to conceal the extent of their losses. They’d also find that the banks are trying to keep housing prices artificially high to avoid heftier losses that would put them out of business. One thing is certain, 600,000 “disappeared” homes means that housing prices have a lot farther to fall and that an even larger segment of the banking system is underwater.
Here is more on the story from Mr. Mortgage “California Foreclosures About to Soar…Again”
“Are you ready to see the future? Ten’s of thousands of foreclosures are only 1-5 months away from hitting that will take total foreclosure counts back to all-time highs. This will flood an already beaten-bloody real estate market with even more supply just in time for the Spring/Summer home selling season…Foreclosure start (NOD) and Trustee Sale (NTS) notices are going out at levels not seen since mid 2008. Once an NTS goes out, the property is taken to the courthouse and auctioned within 21-45 days….The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium.”
JP Morgan Chase, Wells Fargo and Fannie Mae have all stepped up their foreclosure activity in recent weeks. Delinquencies have skyrocketed foreshadowing more price-slashing into the foreseeable future. According to the Wall Street Journal:
“Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can’t meet their loan payments, up from about 1.7 million in 2008.” (Ruth Simon, “The housing crisis is about to take center stage once again” Wall Street Journal)
Another 20 percent carved off the aggregate value of US housing means another $4 trillion loss to homeowners. That means smaller retirement savings, less discretionary spending, and lower living standards. The next leg down in housing will be excruciating; every sector will feel the pain. Obama’s $75 billion mortgage rescue plan is a mere pittance; it won’t reduce the principle on mortgages and it won’t stop the bleeding. Policymakers have decided they’ve done enough and are refusing to help. They don’t see the tsunami looming in front of them plain as day. The housing market is going under and it’s going to drag a good part of the broader economy along with it. Stocks, too.
And now for something completely different…
I think those penguins stole that girl’s boobs.
Anyone else having problems getting a home loan? Got any tips and tricks?
Buy a bank? Oh wait. We already did. Of course, real capitalism would say that since we paid enough to buy the bank, it is ours. It’s only in our broken system where we can pay many times the amount to buy the bank and not end up with ownership.
I’m just waiting for the current issue of Mother Jones to be available online without a subscription to post the article. I’ll put it on cagematch when it comes out, if no one beats me to it. The title is Banks of America.
I like the “you’d do better with 20% down these days…”
THESE DAYS?!
If that’s the case, we’re just getting back to the way it used to be (for good reason) – before all these foreclosures.
20% was the rule of thumb for as long as I can remember. That’s what my folks had to put down on our first home.
#26 HEY, leave penguins alone, they are cute cuddly and the Linux mascot.
Besides not everyone wants women to have DD sized saggy/faked fun bags, I love the smaller breasted women.
# 19, MattG mentioned that:
“the discussion can devolve into unproductive and distractingly irrelevant discussions”
Isn’t that the main activity here?
#33, lol
#33, Mr. Fusion, piece of work, on target.
#34, lol
# 33 Mr. Fusion said, “Capitalism is the belief in the individual being the best Judge of an object’s worth.”
Actually, capitalism has to do with the accumulation & control of “capital” (money) via charging interest on loans, the manipulation of currency & other shenanigans. It is characterized by not producing anything to actually obtain wealth. In modern times it is often confused with free enterprise. Thus, you had people like Marx who rebelled, although he mis-targeted and included productive people & businesses in his “crusade”.
#40, outside of some dumbed down business school definition, when has capital ever been taken to mean just money? Smith and Ricardo never made such claims.
When it comes to things like Health Care, I am fairly certain the people in need of it are only concerned that it is available, of high quality, and affordable.
What “ism” it is based on is irrelevant to me.
#41 I was stating what the basis and origin of capitalism. Not what has been done with the definition since. Which has done nothing but obfuscate the real issue and reality of economics.
#42, oh, a trifecta!
Even in the most elementary of demand and supply models, a want of something is not enough to constitute demand, the ability to consume is also a requirement. I want an Audi A8, but since I don’t have an ability to pay for one at the moment, I am not a part of the demand for them.
How is this important? Because if we assume there is a market clearing price for healthcare services, the amount of services supplied is where demand and supply intersect. The people who cannot pay the market price will still go without, as will those who weren’t even factored into the demand in the first place. The government can step in and create price ceilings on services to make them more “affordable” but the result is fewer services supplied, i.e. shortage, or lower quality ones. Or the government can provide services beyond what the market is willing to provide, which will result in resources being diverted from areas of the economy in which they could be put to more productive use.
So in short, you can’t have your cake and eat it too.
#44 Correct. Right now there is a shortage of Primary care MDs. That has been driven by Medicare pricing policies. A good example of what you mention in your second from last sentence.