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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

#91

Post by alistairSH »

api wrote: post #66
gdubs wrote: post #54

Earlier quoted context omitted.

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…

Agreed. The notion of wealthy needs to be calibrated for local cost of living as do statistics like the CPI.

Sure. But San Jose's median household income is almost double that of the US as a whole. Is its COL double than national average? I don't believe it is.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#92

Post by api »

alistairSH wrote: post #91
api wrote: post #66

Earlier quoted context omitted.

Agreed. The notion of wealthy needs to be calibrated for local cost of living as do statistics like the CPI.

Sure. But San Jose's median household income is almost double that of the US as a whole. Is its COL double than national average? I don't believe it is.

Cost of living anywhere in the Bay Area is much higher than the national average due almost entirely to real estate.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#93

Post by naveen99 »

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…

Fannie Mae repackages some of the mortgages and sells them back On the market also as credit risk transfers. https://www.fanniemae.com/portal/funding-the-market/credit-r...

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#94

Post by alexhutcheson »

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.

Source? It would be surprising to me if lenders were regularly approving loans where the mortgage payment alone (not including insurance or taxes) was >=48% of monthly income. There are certainly lenders that will approve mortgages with high ratios relative to salary (due to the value of bonuses and equity comp), but the $125,000 figure is all-in income, so this isn't relevant.

A 40% ratio for the $125,000 household would give you a maximum purchase price of $830,000, which would be a conforming loan in the Bay Area, not a jumbo one.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#95

Post by throw1234651234 »

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…

Doesn't matter - if you can afford to make payments on a 1 million house for several years, you are wealthy, simply because you can sell it, take $400,000, and go buy a huge house in the midwest cash.

Being able to pay for a $1,000,000 house and put 200k down makes you well off.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#96

Post by berbec »

tehwebguy wrote: post #89
onlyrealcuzzo wrote: post #77

Earlier quoted context omitted.

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.

And I imagine they take a hellishly long mass transit commute

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#97

Post by neltnerb »

SilasX wrote: post #35

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…

I think the bigger point is that the jumbo loans aren't backed by Fannie and Freddie so if the risk of default is similar then it does make sense to prefer to lend to people who need conforming (under the jumbo limit) loans.

Of course, if you consider "wealthier buyers" they may have quite a few properties, and are more likely to have the resources legally to "go bankrupt" without it impacting them personally. See our POTUS for an obvious example.

So they may be more likely to default by choice because it won't ruin their lives and increase the relative risk of lending to them.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#98

Post by yardie »

oldsklgdfth wrote: post #70
yardie wrote: post #67

Earlier quoted context omitted.

Conventional, FHA, and VA loans are owned by the government. This came about after 2009 financial crisis, once regulators realized the banks were playing fast and loose with mortgage lending. Unlike TARP, they inherited that debt and have held onto ever since.

This is total news to me. So is the US housing industry owned by the US government? My impression was: - conventional is within risk margins of banks and they own that risk - fha requires pmi, that is insurance you buy to cover the extra bank risk - va, mortgages to veterans that the government own

They don't own all of it, but they own the majority of what most people consider mortgages. The high-priced homes in NYC, LA, SF are more commonly jumbo loans. These are considered non-conforming and Fannie Mae can't touch 'em. The 3 you listed are conforming loans and will be absorbed by FannieMae/FreddieMac.

In my case, 30 days after we closed on a conventional loan, the bank sent us a letter stating the loan was transferred to Fannie Mae. They would continue to do the servicing of taking payments, collections, and closing for the next 30 years, hopefully. But SOP is close on the loan and send it to FannieMae.

The old days when you would closed the loan the bank would immediately package it and shop it around. Prior to the financial crisis your loan would constantly be moving around as if it was being traded on Wall Street, which it was. People were sending checks to banks that didn't even hold the loan.

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#99

Post by throwlaplace »

lisper wrote: post #82
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.

bloomberg's media business is a giant content marketing play for the terminals themselves (that's why so many of the stories have deep links or whatever to their software)

Re: Wealthy mortgage borrowers face cold shoulder from lenders

#100

Post by johnbatch »

przemub wrote: post #87
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

Do you know why does it work?

looks like the JavaScript doesn't run because of CORS

Cross-Origin Request Blocked: The Same Origin Policy disallows reading the remote resource at https://www.bloomberg.com/markets/modules/datastrip.json?ver.... (Reason: CORS header ‘Access-Control-Allow-Origin’ missing).

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