Wednesday, April 20, 2011

Is too much debt a bad reason for denying someone a mortgage?

A new CNN Money article titled, "Mortgage denied: Sometimes, for no good reason" claims people are being denied mortgages for bad reasons, but their list of reasons looks pretty good:
  • Too few of the condos in your association have been sold
  • Your debt is too high
  • The wait after foreclosure is extended to seven years from five
  • Missed payments on credit card debt
A condo association with lots of unsold units is on shaky financial ground. A person with high debt is on shaky financial ground. Not paying your mortgage or credit card bills are signs that you have a tendency to be irresponsible with your money.

Meanwhile, the Federal Reserve has proposed an "ability to repay" requirement for mortgage loans:
The proposal under Regulation Z would require creditors to determine a consumer’s ability to repay a mortgage before making the loan and establish minimum mortgage underwriting standards.


  1. Ability to pay the loan back should be considered before making the loan? Shocking, revolutionary! When the government will buy the loan, ability to repay is irrelevant to the originator.

  2. I agree that a person should have their ability to pay the loan back BEFORE the loans where made. The timing from the banksters, as always, are extremely bad for the society.
    The reason that I won't buy right now, is none of the above. I won't buy is because justice has been swept under the rug. I can't speak for you all. but for me it's about the rapacious laws, which BENEFIT the banksters and benefit no one except a handful on the top. I'm not talking about the list that CNN made. I'm talking about charging 79.99% interest for a credit line for a pristine credit rating. I'm talking about charging $5,000/loan for originator fees - no matter the cost of the home. Also (which is a direct effect of the criminal actions of the government), after nearly 40 years of working two or three jobs, I've been illegally fired from job - there is no one who will help in this brainwashed society. The ugly stances of government to protect the criminals and then the society to sit on their butts in reaction, will hurt the country for generations.
    I do have a home, which I'm hanging onto with bloody fingernails, and some of the homes for sale look pretty good for income (which I'm desperate for) but why the hell would I buy a rental, when I've lost the game before I can get it rented?

  3. Sometimes people fall on hard times and need help AFTER the fact that they are in a bad situation...what do you then? Deny them too?

    I don't have a problem denying the "walk away" douchebags who were part of shitheads who fucked up the market but come on...some people lose jobs, fall ill, whatever. These people DO deserve help.

  4. This post is about people buying a new home. If they're in heavy debt, they should sort out their finances before buying a new home.