Mortgage Application Essay

Today I read an article on credit.com citing a New York Times story about Wells Fargo. It says that Wells has violated the Fair Housing Act by requiring applicants for their mortgage products to answer an essay question. Wells is in violation of the law because the question includes procuring about the applicants’ familial status.

Now, I am 100% for giving everyone an equal opportunity to get housing and loans, and I don’t think that one’s gender, age, family size, or other personal preferences/beliefs should be a determining whether or not to give them a loan, but I also don’t think that having an “essay” question is too bad of an idea.

I think that having applicants write an essay about what their intentions are with the home and why they feel like they are qualified for the loan can be a really good thing. Not only will it give lenders useful information about the applicants, but it also gives the applicants a chance to explain any previous derogatory credit information. Having this type of requirement will help make the loan application process more personal and, I think, it will reduce the number of defaults.

One issue with this, however, is that it will be difficult for non English native speakers to articulate their worthiness for loans. Therefore, the “essay” should be accepted in all languages and verbally, as well. I know this is a touchy subject, because it leaves room for there to be discrimination based on ones educational background, and that definitely needs to be considered. I do not have an answer for that at the moment, but I’m thinking about it.

What are your thoughts on the subject? Leave a comment and let me know.

Lending Regulations, Too Strict

Mortgage rates are still at record lows. But, what does this mean for all of us? Yes you can get a home or refinance your current mortgage at a phenomenal interest rate, but there is more to it. Why are interest rates so low right now?

Interest rates continue to fall because there are not enough people buying homes. With a lot of the “Bank Owned” inventory hitting the market, there just are not enough qualified buyers. There are not enough buyers because lending practices have become increasingly strict. I agree that the practices during the sub-prime mortgage boom were a major cause of the housing bust, but that doesn’t mean that all of the requirements were too lenient.

Yes, there needs to be good regulation in lending, but there are too many people, wanting to purchase homes, and in the past, would have been qualified to, that cannot. If our government really wants to get rid of all the inventory on the market and pull us out of this recession, homes have to be sold. For homes to get sold, there has to be qualified buyers, and with the lending standards the way they are right now, not many people, who do not already own one or two houses, can qualify.

Leave a comment and let me know what you think.

Will They Forgive Underwater Mortgages

This is a re-post of an article from Barron's.com by Randall W. Forsyth, which I thought was very interesting. I would love to hear your comments about it. http://online.barrons.com/article/SB50001424052970203667404575412951885388376.html?mod=googlenews_barrons

Buying Junior Liens

This article by by Colin Said of the San Francisco Chronicle tell the story of a couple who purchased a trustee's deed to a home in Santa Cruz at auction. Little did they know, they bought a second mortgage on a foreclosed house, that has no actual value.

The article states that Roberta and Randall Stand paid $97,606 for a house at a courthouse auction. They gave the home to their daughter and her fiancé, who in tern, spent over $13,000 fixing it up. Months later, a notice was posted on the door stating the home would sold at auction. After much litigation, Wells Fargo and the couple settled for an undisclosed amount.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/08/01/MNRU1EL529.DTL

This just goes to show that you really need to do all the research when you are buying anything from an auction as there are no guarantees to title or condition.

What do you think about this? Leave a comment and let us know.