Mortgage rules are dranconian
Even Ben Bernanke was turned down for a refi because he was not at his present job for 2 years.
Huh?
Because of the giant fraud that happened in the early part of the century when banks allowed anyone who could breathe get a loan, the pendulum has swung too far the other way. Giants FHA and
Freddie Mac were left holding the bag because they were insuring the loans. Banks create the loans and then sell them so there was no incentive to care who the borrower was. Fannie and Freddie have to pay up when these loans went bad.
Now, new govt rules make the banks more responsible for the loans they create. The loans can’t be sold unless they meet strict guidelines. In addition, if they go bad, the banks have some financial responsibility for covering losses incurred by investors who buy the loans. That has made the banks overly cautious. Regs state fico scores of 620 but the average fico for a borrower is 742.
Thankfully, the pendulum is starting to move back to the middle. Why/ It’s not that the banks are changing anything. It’s because the govt is easing the requirements that must be adhered to in order for the banks to be able to sell their loans. Once again FHA will go back down to 3% for a down payment. It had gone up to 5%. In addition the requirements for making the banks responsible for the loans that go bad, has been eased.
More evidence that the banks control our economy.
