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How tight is mortgage credit? The former Fed chair can't get his loan refinanced

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Mortgage Professional America | 03 Oct 2014, 10:27 AM Agree 0
When Ben Bernanke has a hard time getting a refi, you know the market's in trouble
  • Nancy V | | 03 Oct 2014, 10:48 AM Agree 0
    How is that even possible, unless he is underwater on his mortgage and wanted cash out. Was this a primary residence? Did he have a BK, collection, etc. I am really chuckling right now at this. Is he really asking, have LENDERS gone too far? Maybe he needs to ask DOJ and the CFPB that question as they continue to sue the pants off of the lenders. Until we all have written clarity from Cordray, they should keep turning down our "one size fits all" QM mortgages if they don't "fit".
  • Mike Freeman | | 03 Oct 2014, 10:49 AM Agree 1
    When he was Fed Chairman, he was an employee of the Federal Government and received a W2. Now that he has resigned, he is no longer an employee. He is now a "Self Employed" speaker for $250K a speech. Guides are if you are self employed and want a mortgage, you must have 2 years of your most recent tax returns to show your income in the same line of work. Mr. Ben doesn't have those. Yet.
  • Michael Lasson | | 03 Oct 2014, 10:59 AM Agree 0
    Good, maybe they will see what we are putting our clients through, its ridiculous!
  • Cheryl M | | 03 Oct 2014, 11:02 AM Agree 1
    OMG, LOL !!!!!! He's neither underwater or now Self Employed...He makes $250K as a "speaker" that is a ligit form of employment, yes self employed; but I'll bet his tax return tells us he wrote off everything under the sun. Take all his deductions off his 250k his DTI goes from out of the ball park so pay some taxes then he'll fall into the right ratio. LONG STORY SHORT...plan ahead BEN if you have plans to purchase, refi etc...don't use so many write off's. Ben show us that 4506T&Returns... $250K goes to 130k real quick....doesn't it? Guidelines are guidelines even for Ben.
  • Bob Ripe | | 03 Oct 2014, 11:10 AM Agree 0
    Mike Freeman hit the nail on the head.
  • LAF | | 03 Oct 2014, 11:15 AM Agree 0
    Not really sure why he indicates that "lenders may have gone too far". This has nothing to do with the lenders and everything to do with the regulations and the regulators including the CFPB. The regulations are staggering to say the least. Mr. Cordray is too busy assessing penalties to see how impractical and/or restrictive the rules are.
  • Michelle P | | 03 Oct 2014, 11:20 AM Agree 1
    How shocking! Is it possible that after years of employment with a fixed salary, he's recently (Jan 2014?) entered the realm of self-employment? Perhaps the lender is unable to verify his "ability to repay" the requested mortgage because his last two years filed tax returns don't reflect sufficient (or any?) income - from self-employment? Just because he may have sufficient assets to pay the mortgage in full, or sufficient equity to protect the bank against loss in the event of default, or even the prospect of huge earnings from public speaking and book deals in the very near future, the lender can't sell the mortgage on the secondary market if they don't follow accepted underwriting policies to determine his income and it's likelyhood of continuance. What's really surprising to me is that he didn't pursue the refinance before he left federal employment , back when rates were even lower.
    I didn't see any specific details regarding the mortgage amount requested, or his home value, but I'm relatively certain that before this story was in print Mr. Bernanke was inundated with calls from lenders willing to refinance his home on a portfolio product mortgage product that would allow a bank commitee to exercise judgment regarding the risk of default and approve his mortgage application.
  • Loan Producer | | 03 Oct 2014, 11:29 AM Agree 0
    Maybe he should try the 'Friend of Angelo's' approach, lol
  • | | 03 Oct 2014, 11:58 AM Agree 0
    Now that he is self-employed he does not meet the requirements he imposed on others. This should illustrate how difficult it is for folks out in this credit environment and how RESPONSIBLE easing is necessary.
  • | | 03 Oct 2014, 12:54 PM Agree 0
    i am guessing mr bernanke gets some form of retirement income plus the benefit of his wife's income, so i doubt it was his lack of two years of self employment or dti issue that kept him from refinancing. he only has to be self employed for one year if he is in the same line of work as when he was a w-2 employee, which i would say that he is. plus, you dont know if he filed as a self employed person prior to leaving the fed.
  • Mortgage DNA | | 03 Oct 2014, 02:18 PM Agree 0
    This is a high profile example of how beneficial alternative documentation - yes even low documentation - mortgages were for the housing market. In my opinion, overnight removal of low documentation mortgages continues to contribute to our sluggish economic recovery.

    Before you go crazy on me - NO, I'm not talking about No Doc 100% mortgages for investment property. I feel that with proper FICO scores, credit histories (including mortgage history), employment history, and (most importantly) equity requirements, our housing market and domestic economy would benefit from careful low documentation lending.

    You can joke about Countrywide and Indy Mac, but before all these programs were cancelled , someone should have dug in to determine if some low doc scenarios performed. For example: lets assume Mr. B. lives in the subject property, has a 740 FICO, has $1M cash or IRA, and needs 75% LTV on a $500,000 home - what are the odds he defaults on a $400,000 mortgage considering his position? Any reason not to approve a No Income, full asset verification mortgage?

    I am tired of not being able to help highly qualified borrowers because our current "one size fits all" credit market doesn't work.
    Some of our hardest cases, and dumbest denials, are from borrowers who are extremely unlikely to default.
  • | | 03 Oct 2014, 02:43 PM Agree 0
    I find it amusing no matter what it is. Sometimes the unintended consequenses=justice served. Maybe they will pay attention now.
  • Gary C | | 03 Oct 2014, 03:52 PM Agree 0
    Disgraceful what they have done to self employed people in order to qualify for a mortgage even when they have two yearsof tax returns.
  • Wm Matz | | 03 Oct 2014, 06:11 PM Agree 0
    Excellent point, Mortgage DNA. Low doc/no doc worked fine for the original low LTVs, e.g. 65%. It was when they got greedy and pushed to 80, 90, and 100 that most of the problems occurred. Mow legitimate low/no doc borrowers are trapped without the ability to refi, even though they have years of good payment history.
  • Mike Freeman | | 04 Oct 2014, 08:32 AM Agree 0
    Agreed with the 1 year tax returns IF in the same line of work. However, I don't believe being in charge of the Federal Reserve and making speeches constitute being in the same line of work.
  • Greg | | 06 Oct 2014, 09:51 AM Agree 0
    Classic - how about going to a community bank where they keep the mortgage and do not sell the mortgage to the bankrupt Freddie and Fannie, for thirty years the goverment has dismantled the mortgage business and the Federal Reserve bought them since the crises in 2008, took the risk away from investors and now have the entire population using taxpayer money to support financial conglomerates with dirivatives 4,000 % above their assets - brilliant - i do not expect many of the media nor our representives to follow this line of thought. Save the community banks by bringing your business there Ben - they would make the mortgage even with Qualified Mortgage regulations!
  • GSB | | 08 Oct 2014, 03:35 PM Agree 0
    I agree with just about everyone and everything you've all said but one thing is for sure, this industry WILL NOT survive on the purchase business and what is left of the refi boom, period!! That's Banks, Mortgage Bankers and Brokers. We need more product, it's just that simple. I also understand the Bank's and the GSE's reluctance to loosen credit after the nation barely survived, what few if any in the government will admit, was this country's 2nd Depression. Included in that group are the AIG's of the world who hold (or held) hundreds of billions in worthless MBS's. I don't believe the large buyers, frankly of what would now be the least risky securities in ages, are prepared to dive back into that arena again. We can also blame the avarice and cupidity exhibited by Wall Street who, in part, created the demand, and profited from, the most ridiculous products ever heard of. But Michael Douglas says "Greed is Good"! I disagree and we are all paying dearly for it. Sorry for rambling everyone, I could go on and on but to address the actual subject of this reply, rules are rules and they have to distributed, administered and enforced by all. Mr. Bernake's dilemma is a perfect example of "by the book" restrictive lending regulations that must change. I also agree, Mr. Bernake, come to my bank, I portfolio, you're approved before you get out of your car!
  • 1silverbullet | | 10 Oct 2014, 12:28 PM Agree 0
    Perhaps the lender uncovered an undisclosed "slush" account with such large deposits that they were scared off.
    Just a thought.
  • 1silverbullet | | 10 Oct 2014, 12:34 PM Agree 0
    Ben, those "unreimbursed" business expenses are a real killer...
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