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Wealthy mortgage borrowers face cold shoulder from lenders

bloomberg.com

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Re: Wealthy mortgage borrowers face cold shoulder from lenders

#31

Post by sandoooo »

justaguyhere wrote: post #20

Why exactly should we care about wealthy borrowers at this point, when millions of people are losing their jobs/health insurance...? So what if they get told no - it is not like they are living in a 500 sq ft apartment anyway

The interesting part of the story is that the people with $700k mortgages - I'd hesitate to call this class 'the wealthy', more like the 'above-average middle class' - are getting hit with a double-whammy: their wages are paying for the mortgage subsidies for the poor which are driving their own mortgage needs off the market.

Next stop: universal health care. Then the real gnashing of teeth starts.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#32

Post by Spooky23 »

justaguyhere wrote: post #20

Why exactly should we care about wealthy borrowers at this point, when millions of people are losing their jobs/health insurance...? So what if they get told no - it is not like they are living in a 500 sq ft apartment anyway

When the people with a huge mortgages (ie. regular people in expensive areas) start losing their shirts, they are going to further crater the market.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#33

Post by zzzzzzzza »

wegs wrote: post #16
em500 wrote: post #3

Earlier quoted context omitted.

> taking the umbrella now that it's raining Always found this a very strange metaphore. Banks seem to always face criticism for 1) when they don't lend to people who need it most and 2) when they do lend to people who are likely to default. It seems fairly obvious that there is a very large overlap between those groups.

The central friction is there are two conflicting views of banking: 1) Lending, insurance, and investment as a social service. People need homes. Businesses sometimes need to weather crises without bankruptcy. Startups need funding. People need educations. 2) Lending as a private investment. You want interest rate to reflect risk. Evolving monetary theory means federal interest rates are set to reflect #1. The underl…

That is not at all what china does. China has a huge banking sector, much bigger than the US. And no ... almost all of those banks are independent of the central bank. US and Chinese systems are very similar. Europe is a bit different. England, spain, italy, don't really have the large number of small and mid sized banks that the US or China does (germany does have many small banks however... noticing a trend? small(er)/more banks = industrial might). And ECB is obviously in a bit of a different spot than the Fed or Chinese central bank since they control the currency for disparate countries.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#34

Post by kmanlives »

sandoooo wrote: post #31
justaguyhere wrote: post #20

Why exactly should we care about wealthy borrowers at this point, when millions of people are losing their jobs/health insurance...? So what if they get told no - it is not like they are living in a 500 sq ft apartment anyway

The interesting part of the story is that the people with $700k mortgages - I'd hesitate to call this class 'the wealthy', more like the 'above-average middle class' - are getting hit with a double-whammy: their wages are paying for the mortgage subsidies for the poor which are driving their own mortgage needs off the market. Next stop: universal health care. Then the real gnashing of teeth starts.

In the state of Georgia, I'd definitely call someone with a $700k mortgage wealthy. I'm in an affluent suburb north of Atlanta and I'd probably be showing some bias if I didn't consider myself to be wealthy in a $400k house. If I read it correctly, the example given in the article was for a refinance for a lower rate, and while that would be nice, it's not as likely to be a necessity. I've considered a refi, but as a small business owner I'm not sure I'd qualify in the current climate (even though my software company is still making money).

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#35

Post by SilasX »

Relevant points:

>Stanley Middleman, chief executive officer of Freedom Mortgage Corp., one of the nation’s biggest home-lending companies[:]

>“Whether the assets are good or not good is irrelevant because there’s no liquidity to buy them,”...

>Wealthier buyers are proving to be just as likely to stop paying their mortgages. Approximately 5.5% of jumbo loans -- 131,000 borrowers -- have asked to postpone payments due to a loss of income, compared with 6% of all loans, according to Black Knight Inc.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#36

Post by sandoooo »

kmanlives wrote: post #34
sandoooo wrote: post #31

Earlier quoted context omitted.

The interesting part of the story is that the people with $700k mortgages - I'd hesitate to call this class 'the wealthy', more like the 'above-average middle class' - are getting hit with a double-whammy: their wages are paying for the mortgage subsidies for the poor which are driving their own mortgage needs off the market. Next stop: universal health care. Then the real gnashing of teeth starts.

In the state of Georgia, I'd definitely call someone with a $700k mortgage wealthy. I'm in an affluent suburb north of Atlanta and I'd probably be showing some bias if I didn't consider myself to be wealthy in a $400k house. If I read it correctly, the example given in the article was for a refinance for a lower rate, and while that would be nice, it's not as likely to be a necessity. I've considered a refi, but as a…

I'd say much of this board disproportionately lives in places where $700k is the going rate for a normal mortgage, though.

My definition of 'rich' would mostly include people who don't need $700k mortgages.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#38

Post by rapind »

em500 wrote: post #3
onetimemanytime wrote: post #2

They'll lend you, just at higher rates. This is banks doing what they do, taking the umbrella now that it's raining.

> taking the umbrella now that it's raining Always found this a very strange metaphore. Banks seem to always face criticism for 1) when they don't lend to people who need it most and 2) when they do lend to people who are likely to default. It seems fairly obvious that there is a very large overlap between those groups.

I don't care if banks make foolish or intelligent lending decisions... I just don't want my tax dollars bailing them out when they screw it up. If I am bailing them out, then I should be entitled to an opinion on how they run their business... heck I should be a shareholder!

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#39

Post by martinald »

justaguyhere wrote: post #20

Why exactly should we care about wealthy borrowers at this point, when millions of people are losing their jobs/health insurance...? So what if they get told no - it is not like they are living in a 500 sq ft apartment anyway

You'd be surprised, at least in London (and I'm sure even worse in SF/NYC) you can have an enormous mortgage for a small apartment.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#40

Post by nsfyn55 »

Wealthy Borrower: "Why can't I refi lower?"

Lender: "No, because your loan isn't secured by the government"

Wealthy Borrower: "I am just using logic here, you're telling me a riskier borrower with lower credit than me can refi?"

Lender: "If their loan is secured by the government, yes"

Wealthy Borrower: "I don't understand"

Lender: "Well at least we agree on something"

Are you really using logic? Seems like a dubious claim to me. Capitalism is a harsh mistress Mr.1%. Don't like it move to Denmark.

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