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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

#51

Post by lotsofpulp »

mgkimsal wrote: post #48
joezydeco wrote: post #37

Earlier quoted context omitted.

Underwriters like to see six months of reserves on hand, but they don’t monitor that after the closing.

was close to building a house earlier this year (early March) and was talking to two lenders about construction loan. being self-employed was an extra small bump for underwriting, and I asked about loss of income because the covid19 stuff was just starting to become big news. Both indicated that their underwriters would likely check up after closing - 30 or 60 days after - to check on income at that point, to see if…

In certain commercial mortgages, you have to maintain a certain debt service coverage ratio (DSCR), which is operating income divided by debt service.

If not maintained above a certain ratio, the lender has the right to come and take over your bank accounts and you have to submit to them to get reimbursed for expenses.

Never heard of it in a residential loan though.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#52

Post by nsfyn55 »

SilasX wrote: post #50
nsfyn55 wrote: post #40

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…

But the lender dismissed the borrower (in the story) as "you're trying to use logic", which is at least as big a confusion (and inability reflect on the root of the disconnect).

The borrower is sort of using logic, but because of his extreme level of entitlement he fails to understand his premises are flawed.

Low rates are a function of your total risk not your perceived status as a responsible borrower.

The lender is using logic(the refi equation was almost certainly devised and reviewed by a qualified actuary)

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#53

Post by yardie »

nsfyn55 wrote: post #40

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…

Just a nitpick, your mortgage isn't secured by the government. It's actually owned by the government, Fannie Mae. Your bank is just the middle man that services it. If your bank doesn't want to service it or the government don't think they are managing it correctly they will move it to another bank.

So I'm not surprised these banks don't want to touch jumbo loans right now. That debt is their risk. They can't wash their hands of it if it goes tits up.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#54

Post by gdubs »

alexhutcheson wrote: post #47
supahfly_remix wrote: post #21

I'm not sure what qualifies as wealthy, but most houses in the SF Bay Area bought in the past few years are probably financed with jumbo mortgages. E.g, 20% down on a $1MM house leaves $800k to be financed, which is greater than the $765k criteria stated in the article.

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 under $100k a year is considered “low income”.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#55

Post by SilasX »

nsfyn55 wrote: post #52
SilasX wrote: post #50

Earlier quoted context omitted.

But the lender dismissed the borrower (in the story) as "you're trying to use logic", which is at least as big a confusion (and inability reflect on the root of the disconnect).

The borrower is sort of using logic, but because of his extreme level of entitlement he fails to understand his premises are flawed. Low rates are a function of your total risk not your perceived status as a responsible borrower. The lender is using logic(the refi equation was almost certainly devised and reviewed by a qualified actuary)

I know, I was only objecting to his attempt to resolve the confusion by saying "you're using logic". That's not the problem, and the lender should realize it and say something more productive.

In case it wasn't clear, the original commenter was referencing this part:

>>“I told the guy at the bank, ‘I’m trying to use logic here,’” Adler said in an interview. “And he said, ‘That’s your problem.’”

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#57

Post by BoiledCabbage »

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…

> 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.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#58

Post by jfim »

justaguyhere wrote: post #44
mimikatz wrote: post #27

Earlier quoted context omitted.

You should have empathy for everyone. You should have empathy for the pain poor people experience and the pain the rich people experience. Someone's income doesn't make them more or less human.

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.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#59

Post by _curious_ »

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…

"Otherwise you could say that just about any American middle class family is wealthy" Comparatively correct in the global sense.

Nothing bad can come from putting things (yourself?) into a global human perspective. Considering how much chance is involved with where we are born, a middle class person/family in the US is quite wealthy by default.

I wonder how many take pause on any regular basis just to acknowledge and appreciate the relative wealth that they were lucky to be born into?

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#60

Post by oldsklgdfth »

yardie wrote: post #53
nsfyn55 wrote: post #40

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…

Just a nitpick, your mortgage isn't secured by the government. It's actually owned by the government, Fannie Mae. Your bank is just the middle man that services it. If your bank doesn't want to service it or the government don't think they are managing it correctly they will move it to another bank. So I'm not surprised these banks don't want to touch jumbo loans right now. That debt is their risk. They can't wash th…

> your mortgage isn't secured by the government. It's actually owned by the government, Fannie Mae.

I'm confused what type of mortgages does this apply to? Is a conventional 20% down mortgages owned by the government somehow?

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