In today’s daily, I was struck by a comment from Jim Willie, “The US housing market is stuck in quicksand. Low mortgage rates mean nothing to home loan applicants who must pass very strict FICA tests.” On September 16th Susan and I finally closed on our condominium in Aventura, Florida. It was a process from Hell! In spite of the fact that I put up a down payment of nearly 50% IN CASH, have perfect credit, a large income, and very little debt (only on my home in Minneapolis), I was treated like I was unqualified, and had bad credit. It was like the bank was doing me a favor by giving me the loan. I started the process in July and the closing was set for September 13th.
I spent the last two weeks, prior to the closing date of September 13th, on the phone with or emailing to our US Bank representative to make sure the closing was on time. The closing was in Aventura at the office of the seller’s attorney. We had already made flight reservations to arrive in Miami on the 13th and were moving into the condo that night. Fortunately, I had built a warm relationship with the seller and he allowed us to move in BEFORE the closing, which wasn’t completed until the 16th. With a full two and a half months lead-time, they still couldn’t get the documents to the attorney on time for the closing. This was one of the most unpleasant experiences I have had to deal with in years. If I had that much trouble qualifying, then the system is broken! There were circumstances that made my loan application even more difficult than most – it was a Jumbo loan (above the limit of $419,000), it was in Florida and it was for a condo. Short of an all-cash sale, it is nearly impossible to get a loan for an expensive Florida condo. You see, the banks do not want to keep the mortgages they issue – they want to off them to Fanny or Freddy and it is the government agencies who make you jump through hoops to get the loan. I had to justify every large deposit in my bank account – who it was from, what it was, etc. I had to provide employment history, income, credit reports and more, going back years for both Susan and myself. It is a testament to my financial strength and excellent credit that we even got a loan at all. Yes, I could have paid cash and not used bank money, but to sell gold and silver and mining shares NOW made no sense at all. Better to use bank money at less than 4% than to sell my metals. But I swear, at one point, late in the negotiations, I told him, “If I knew in advance, all of the crap you would put me through, I would have paid cash and not dealt with you at all!”
He was apologetic and said “It’s the government that makes us do all of these crazy things.” They went from one extreme (anyone qualified for a loan) to the other (practically no one qualifies). If you want to see just how inefficient government really is, try and get a loan for a new home or a second home in Florida.