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Wealthy mortgage borrowers face cold shoulder from lenders

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Re: Wealthy mortgage borrowers face cold shoulder from lenders

#81

Post by tren-hard »

gdubs wrote: post #54
alexhutcheson wrote: post #47

Earlier quoted context omitted.

The median sales price for a house in the US is $327,000[1]. People buying houses for $1 million are wealthy by any standard. [1] https://fred.stlouisfed.org/series/MSPUS

They’re not wealthy by the standard of the Bay Area, which is the point of the comment you’re replying to. Wealth is relative. Otherwise you could say that just about any American middle class family is wealthy — just look at the entire world’s population, where anyone making over something like $40k a year would be in the top 1%. Just to underscore the point, Palo Alto declares not too long ago that anyone making un…

> They’re not wealthy by the standard of the Bay Area

Is that because all of the people working service jobs can no longer afford to live in the Bay Area which makes $1 million 'not wealthy'?

Those people who make minimum wage of course work there so do we include or exclude them from this pov?

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#82

Post by lisper »

1-6 wrote: post #61

To read the article, just put a period (.) at the end of the domain. Eg. domain.com/article --> domain.com./article

I normally frown on people who whine about paywalls. Publishers have to make a living, and you are not entitled to access their content for free. But I gotta say, that is a devilishly clever hack.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#83

Post by tren-hard »

jfim wrote: post #58
justaguyhere wrote: post #44

Earlier quoted context omitted.

Not sure what this has got to do with empathy. If rich people don't get favorable mortgage, it is at max an annoyance to them. They are not going to be homeless or going to ask for food stamps. If a normal family with one home and one mortgage is not able to refinance or not able to pay their mortgage for a few months, their bank will go after them and they will end up on the street. Sure we can talk about it and fee…

Keep in mind that in high cost of living areas, such as the Bay area, all housing is essentially jumbo mortgages. If jumbo loans are not available or hard to obtain, this means that people who do lose their jobs face an illiquid market and don't have the option to sell their house to avoid default, and thus end up on the street.

Then housing prices would fall to prices in which people can secure a loan and then stabilize around that.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#84

Post by gindely »

imtringued wrote: post #17
gindely wrote: post #4

Earlier quoted context omitted.

Has anyone ever criticised a bank for lending to someone who needs it most at a rate they are likely to afford to minimise chance of default? I mean banks aren't charities and maybe they're not/shouldn't be obliged to do this, but it's not like everyone is being hypocritical - we're allowed to expect institutions to do things that are in the public interest rather than their own private interest (freedom of opinion a…

There are risk pools for lending because every business has a different cut off point below which a borrower is considered too risky and therefore gets rejected. Imagine you are a bank employee at Bank A with very low default rates and consequently low interest rates (say 2.5%) and a homeless man has an appointment with you because he wants a small loan of $5000 to find an apartment and a job. He has no assets or inc…

But now you have just portrayed situations in which banks provide affordable loans to people who don't need them, and unaffordable loans to people who need them. But this is what was criticised in the first place so we know it happens. So I'm not sure what the point of your first four paragraphs were.

Your final paragraph is exactly what my earlier comment rejects. The general public has every right to criticise banks for acting in the banks' private interest. Banks are not charities, it is true. But they are groups of moral agents acting in a community, and the community has every right to hold the moral agents to whatever standards the community wishes to.

The bank has the legal right to pursue its own private interests, so long as it acts legally, and has the legal right to not act as a charity. But that is not an argument against the view that the bank should act in conformance with community expectations, and if necessary the law should be changed to ensure that they do.

The fact that banks make ridiculous profits - they're not just covering costs - is also relevant. If your business is making billion dollar profits, you're vulnerable to the claim that you should give greater weight to public opinion, and the notion that you're only acting to cover costs is a red herring.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#85

Post by gindely »

aguyfromnb wrote: post #8
gindely wrote: post #4

Earlier quoted context omitted.

Has anyone ever criticised a bank for lending to someone who needs it most at a rate they are likely to afford to minimise chance of default? I mean banks aren't charities and maybe they're not/shouldn't be obliged to do this, but it's not like everyone is being hypocritical - we're allowed to expect institutions to do things that are in the public interest rather than their own private interest (freedom of opinion a…

> Has anyone ever criticised a bank for lending to someone who needs it most at a rate they are likely to afford to minimise chance of default? Does any business operate this way, including the one you work at? That is, selling things to the people who need it most for the amount that "minimizes default" (ie lowest price). > we're allowed to expect institutions to do things that are in the public interest This articl…

> Does any business operate this way, including the one you work at? That is, selling things to the people who need it most for the amount that "minimizes default" (ie lowest price).

Yes

> This article is about wealthy mortgage borrowers. The first guy is 60 years old with a $700k mortgage who wants a lower rate. How is it in the public's interest to grant him that? Perhaps it's in the public's interest for this man to continue to pay his modestly higher rate in order to cover expected losses from those who truly need it?

I wasn't responding to the article.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#86

Post by _curious_ »

jfim wrote: post #75
_curious_ wrote: post #69

Earlier quoted context omitted.

I wonder what % of those with jumbo loans are completely out of a job? And further in such circumstances that they cannot afford to pay even a reduced or deferred mortgage payment? Or move into a lower cost apartment in another market? Going straight to the street tomorrow sounds like a stretch with options along the way especially for someone who was in a jumbo in the first place. Loans take a long time to default/e…

Good points. I'm assuming the job market for non engineers in the Bay area right now is pretty tight, so for them, and assuming they have a mortgage, they might be caught between a rock and a hard place. I don't know what percentage of the market that is though.

"I'm assuming the job market for non engineers in the Bay area right now is pretty tight, so for them, and assuming they have a mortgage, they might be caught between a rock and a hard place."

I'm not from/in the bay and not paying attention to it, so will go with your assumptions here.

Zooming out a bit on the general topic of high COL markets though, it's interesting talking with people around my high COL community who feel like they deserve to live and stay here regardless of the changing economy. Thinking out loud:

Maybe high COL markets are untenable in this economy for a certain percentage of the population?

...if there were no welfare schemes going around wouldn't these high COL areas rebalance faster to some equilibrium in line with broader affordability?

Are the handouts just further propagating an attitude of entitlement while also artificially inflating high COL markets otherwise overdue for a reset?

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#88

Post by borkt »

borkt wrote: post #71
BoiledCabbage wrote: post #57

Earlier quoted context omitted.

> Otherwise you could say that just about any American middle class family is wealthy — just look at the entire world’s population Any middle class American is wealthy by the world's standard. The quality of life provided by middle class America is the life of the 1%. To not see this is to not understand how most of the world lives, and the challenges people face from being less lucky.

I’ve spent time a lot of people that live much better than me in what are considered third world countries, including overall quality of life, who make far less than I do. There are countries where money goes much further and family holds much greater value when compared to work than US culture (and laws) generally produces. They see friends and family for meals many times a week, their health care is affordable, and…

This recent post covers what I am describing here far more in depth and relate to Europe. My experiences have been in South America

https://news.ycombinator.com/item?id=22777745

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#89

Post by tehwebguy »

onlyrealcuzzo wrote: post #77
alexhutcheson wrote: post #74

Earlier quoted context omitted.

People buying houses for $1 million are wealthy even by the standards of the Bay Area. Median household income in the San Jose-Sunnyvale-Santa Clara metro area is ~$125,000[1]. A traditional $1 million mortgage would require a $200,000 down payment, and ~$5000/month. The monthly payment alone would be 48% of the combined monthly pay for everyone in the household in a household making the median. House purchases at th…

And most people spend >40% of their income on rent & mortgage payments in The Bay. The average person with a house in The Bay probably doesn't make as much money as you think. They mostly have very high debt to income ratios.

Sure but someone is still running the drive-thru at every McDonald’s in the bay area.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#90

Post by jfim »

_curious_ wrote: post #86
jfim wrote: post #75

Earlier quoted context omitted.

Good points. I'm assuming the job market for non engineers in the Bay area right now is pretty tight, so for them, and assuming they have a mortgage, they might be caught between a rock and a hard place. I don't know what percentage of the market that is though.

"I'm assuming the job market for non engineers in the Bay area right now is pretty tight, so for them, and assuming they have a mortgage, they might be caught between a rock and a hard place." I'm not from/in the bay and not paying attention to it, so will go with your assumptions here. Zooming out a bit on the general topic of high COL markets though, it's interesting talking with people around my high COL community…

Well, high cost of living markets are basically propped up by the surrounding economy. It's true that the high cost of living areas would rebalance, but that can leave the current homeowners underwater.

As for the handouts part of your comment, what do you consider a handout? The stimulus checks? Is QE considered a handout?

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