We’ve been approved for a loan to refinance our home. A very large loan – at least for us. And I’m mad about it! Damned mad!!!
First, a little history to help understand why my angst level is so high. We built our home several years ago when interest rates were a couple points higher. As seniors, in an evermore expensive economy, we now would like the monthly payments to be a bit less. Lower interest rates can do that.
Recently, a retired, very intelligent friend of ours surprised us when he said – matter-of-factly – he had refinanced his loan online! Not what I expected to hear from someone about my age who is as aware of all the scams out there as I am. Remember Countrywide? He said it was “a piece of cake” and the process was not only thorough but unusually fast as well. Even low closing costs. He was a happy camper.
I ruminated on his story. At first, skeptically. Then, as I learned more about the process, it seemed worth of checking out. Not doing just yet. But checking out. I’ve got a little real estate and mortgage experience in my background, so I figured I knew the questions to ask and the pitfalls to watch for. I selected one of the more established names, went online and did my research. Everything seemed in order.
When the loan officer called to follow up, he was professional, patient and answered all my queries satisfactorily. O.K. We started the paperwork. Usual stuff: employment, gross income, credit. Nothing out of the ordinary except that, as retired people, our income isn’t what it used to be and the ratio of debt-to-income was higher than it had been before. Bit of a concern.
I faxed 18 pages of his required forms and our tax returns for two years. He contacted a local appraiser and got that part of the process started. Within a week, we got an email telling us the appraisal was about 25% lower than one four years ago but everything was fine and we could start the closing. Great!
Then, the more I reviewed the previous weeks conversations, double-checked the forms and put things in perspective, I began to get mad. And madder. And madder! Because it hit me what was happening.
How bad is our economy? Remember what the tipping point was along Wall Street – and internationally – that drove us into this deep economic ditch? Remember the greedy bastards who packaged all those overpriced and underperforming home loans, sold them as unsecured investment packages around the world, took their profits and watched as our economy went to Hell? The guys who made billions off the collapse of loans that should never have been made, many to people not able to repay them? Any of that sound familiar?
As I reviewed my oral and electronic conversations leading up to our “approval,” I remembered that not once – no, not once – was I asked for our assets. We own a valuable acre property next door, free and clear. We own two late model vehicles free and clear. I have an IRA of some size which was not asked for. Barb has her retirement. Never checked. And a few other things this guy in Phoenix would have no way of knowing about. Because he never asked! And we’re approved!
While I’m sure the major, well-known online mortgage company would perform for us, and I don’t worry about their ability to make the loan, what’s transpiring here is a national company is making a loan to people without having a clear picture of their assets or ability to repay! They are no more sure about that than all the other “mortgage companies” were over the last 10 years when they made hundreds of thousands of similar loans to hundreds of thousands of people who forfeited on them.
Has this country learned nothing? Has the agony of all this pain being inflicted on millions of people in this nation – and around the world – taught us nothing? Do thousands and thousands of foreclosed and abandoned homes not stand as constant reminders that we have to do things differently? What the Hell is going on?
Yep. We’ve been approved. Approved by a company that has no more real idea of our ability to repay than Winston, our family Rat Terrier. It is advancing a significant six-figure loan without all the facts, will package that loan with others and sell them all off in the second money market as securities for investors. And the damned investors will buy ‘em! And resell ‘em!
Are you a little clearer now why I’m not a happy camper about this? Do you see the idiocy of a wrecked national economy about to get hit with more of the same economic arsenic? I hope it makes you mad, too.
We cancelled the deal. No go. I got that mad. But we’ll probably refinance with a local company. If we do, this I promise: we’ll make the monthly mortgage payments and carry out our obligation even to the grave. But the hundreds of thousands of loans being made out there right now … the ones where the lender has no idea of the true ability to repay – are just like the ones that have cost you 30-40% of your home’s value in the last three years.
Well, you’re on your own there. Caveat emptor!