All Dollars, No Sense

Published March 31, 2012

Among the many unfathomable vagaries of this time is the yo-yo world of mortgage lending. In 2007, you could borrow $300,000 or more to purchase a home if you could fog a mirror. They called it “no doc” or no documentation lending. Lenders (as well as buyers) got burned making bad decisions.

To compensate for those bad decisions and lax practices lenders decided to change from no doc to wanting to know everything about everything, almost including what you were wearing June 13, 2001.

I’ve just been through a refinance of the home we’ve lived in since 1984. The new rate and new mortgage payment are lower than I was previously paying, low enough to justify the “refi,” as they call it in the trades. But had I known the hassle we would have to go through to complete this transaction I wouldn’t have done it.

The lender wanted to know about a house I co-owned 19 years ago, a post office box I once rented and an address I’ve never even visited. “Welcome to my world,” the mortgage broker said in response to my protests. Just as it wasn’t reasonable or prudent to loan money to any and everyone it isn’t reasonable to hassle everyone.

Mortgage lenders prove once again that common sense isn’t.