Wednesday, July 6, 2011

If I ran FHA

I get so angry over foreclosures. At the risk of being called a Republican, I think people who take out mortgages need to follow through on their commitments.  I don't relieve the mortgage companies of their responsibility to ensure - to the best of their ability - that the people who take on these mortgages can afford them (personally, I like to see mortgages that are no more than 2x annual income, but I do realize that some areas have such a high cost of living that this is not possible). 

What angers me even more is when people who afford their mortgages decide to (their words) "give the house back to the bank."  What a kind phrase they use.  "Give" as in they are giving a present, isn't it cute?  No, it's not cute.  It's a strategic foreclosure. You are choosing to not to pay a mortgage you can afford because you have negative equity due to your own stupid actions (taking a home equity loan typically).

I don't have any sympathy.  You have the assets, you have the income stream.  You just don't "want" to follow through on your contractual commitments anymore.  When people lose their jobs, that's a different story.  Ideally, before you buy a home, you should have a year of mortgage payments in the bank in the event of job loss.

I think my ideal career is underwriter because I have this vision of the people I will loan money to, and coincidentally the people I would loan to are likely the people who don't appear to "need" the money, at least on paper.

But, just think about it.  Had my loan criteria been used for the past two decades, there might not have been such a huge housing crash.  Of course, it may never have soared as high initially.

Criteria 1:  20% down payment
Criteria 2: Enough in the bank after Criteria 1 fulfilled in order to pay 12 mortgage payments
Criteria 3: Loan amount doesn't exceed 2 years of gross annual income


Wendy said...

I meet your criteria! So why is our underwriter being such a PITA???

Quietly Subversive said...

I have no idea. Sorry it's been so awful.