So, having not owned a home since about 1995, and that one having had axles underneath it, my beloved Wife Mk. II and I recently learned the ins-and-outs of the new & improved home financing system. I was not amused.
Part of the problem, actually a great big fat part of the problem, was the lending institution we chose; Crapital Mortgage in Missoula, MT. We went in a couple of months before we even started looking at homes to get a pre-approval on a loan and see what price-range we could qualify for, filled out all the reams of paperwork, jumped through all the hoops. All was fine ‘n’ dandy we were told. OK, we figured we were good to go and went shopping in our price range.
In hindsight, I should have known it was going to be a clusterfudge. The little gal who processed our pre-approval did indeed have great assets, but her math never seemed to come out the same twice in a row. That and the fact that the first time we visited that mortgage company, I peeked in the window before we entered and saw everybody running around the place poking each other in the eye balls and going, “Woop! Woop! Woop!” and “Nyuk! Nyuk! Nyuk!”
Anyway, as I said, we went through the whole nine yards of pre-approval which one would think meant a loan in a certain price range would be, well, pre-approved. It is, until you actually make an offer on a house and it’s accepted. Then all of a sudden, all these little details start popping up, the need for this paperwork or that form or the other statement. Ours came up two days before closing, when the previous owners had already moved out, the moving company was coming, the electric and gas and mail and phone was changing over, etc.
It seems we needed Form # 4782A1 Mk. IV, (w/winch), 1 ea, or whatever the hell it was. One might imagine that a company in the business of processing loans and had been doing it for years might have, say, a checklist of the necessary forms, credit checks, assets, statements, etc. required. That way, they could actually look at the checklist ahead of time and request the documents needed, perhaps even prior to the closing date. One would be wrong in thinking that.
So anyway, months after we were “pre-approved” and finally put an offer on a house in our price range, this kind of shit kept ("No, that was Form # 4782A1 Mk. IV without winch.") coming up at the last minute. Two days before Closing Date #2 something else came up we had to rush to get via fax at the last minute. By then the movers weren’t going to reschedule at the last moment AGAIN, so I stayed home with them while my wife drove 3 hours to Bozeman to sign a paper which, of course, wasn’t actually there yet, so she had to drive 3 hours back. Finally, the next day, with all our possessions in a moving truck somewhere on I-90, we finished closing on the home. We got there at 0830 in the morning and quickly had the keys by 1600 that afternoon.
In addition to the paperwork, we were distressed that the numbers the mortgage company giving us never once matched or added up the same way twice. Being mathematically impaired, I can see the numbers not always adding up. In such case, however, even I’m smart enough to run the numbers over and check the math. Kind of like that old carpenters' adage, "Measure twice, cut once." But then I’m not a state-licensed blonde with huge “tracts of land”.
The whole ordeal was almost like dealing with a government bureaucracy. Almost, but not quite, and some of the hang-ups came from the government.
For instance, there is apparently a new government regulation designed to help the long-since floundered and capsized real estate and lending industry stay submerged. It stipulates you have to cancel your credit cards to get your loan. WTF? It doesn’t matter if you pay your credit down to ZERO at the end of every month and have never had so much as a late payment. So, by buying your own home, you actually hurt your credit score and have to go re-apply for the same credit you’ve had for years a week or so later.
I guess the Nanny State doesn’t want you to take out a big home mortgage and then immediately max out all your credit cards by running off on a “fact-finding junket” to the Caribbean or a “diplomatic” visit to South Africa. It’s not like you, my dear peasant, can cover such expenses with kick-backs, lobbyists, abuse of taxpayer funds, or running a gay prostitution ring out of your posh Washington, D.C. apartment.
Speaking of gay prostitutes, it was our old pal from Taxassachusetts, Rep. Bawney Fwank, who helped the whole housing market collapse right along by refusing to plug the drain when the water started swirling. A certain previous administration wanted to create a new regulatory agency within the Treasury Department to keep a tighter rein on what Fannie and Freddie were up to. Normally, I’m against any new regulatory agency, but at the time Fannie & Freddie were "supervised" by CONGRESS, which, to paraphrase P.J. O'Rorke, is like teenage boys “supervising” the liquor cabinet and the car keys. Opposing the very thought of someone other than Congress "supervising" these entities, Bawney Fwank, ranking member of the House Financial Services Committee at the time, assured us this was not necessary. And I quote:
''These two entities -- Fannie Mae and Fweddie Mac -- are not facing any kind of financiaw cwisis. The mowe people exaggewate these pwoblems, the mowe pressuwe thewe is on these companies, the wess we wiwl see in tewms of affowdable housing.''
While I have no doubt the Fannie & Freddie CEOs were greedy little bastards not adverse the fudging figures and intent on lining their own nests, let's not forget that Fanny & Freddie are GSE's, Government Sponsored Enterprises, and thus required to meet "affordable housing goals" set annually by the Department of Housing and Urban Development (HUD) and approved by Congress.
In plain and simple terms, they had to approve subprime loans to the kind of people who list food stamps and an old Camaro up on blocks in the yard as "assets" and a meth lab as "source of income". Lo and behold, such people defaulted on said loans, toppling the whole house of cards.
Government stepped right in to fix things, by backing up a line of dump trucks to pour taxpayer money into Fannie and Freddy. The CEOs were accused by Congress and the MSM of "Knowing and approving of misleading statements." BWAHAHAHA! Talk about the pot calling the kettle black. Yes, the CEOs were a bunch of despicable pricks but, like a bookie who shares his income with the local Mafioso, they thought they could get away with it because they "had protection." That protection came from (surprise!) Congress.
The book All the Devils Are Here took a long hard look at how GSE's, Fannie in particular, operated hand-in-hand with Congress in a case of what might be called symbiotic crony capitalism.
"Tactics included a massive lobbying effort, neutering the OFHEO (its 1992-created regulator), creating a 'partnership office' network to court the politically powerful with pork, giving high level employment to the well connected, giving out campaign contributions, creating a charity foundation, and threatening critics like FM Watch with retaliation. One [source from book] compared Fannie's activities to Tammany Hall."
No matter the root cause, I figured the collapse would have culled the herd so to speak, weeding out the sick, lame and lazy, leaving only solid lending institutions who knew what they hell they were doing. This is why I get in trouble for thinking.
Apparently, since the government stepped in to "fix" things, the pendulum has swung wildly in the other direction when it comes to us "under-represented" demographics qualifying for a loan. Formerly, a single mother with 17 kids who listed employment as "part-time exotic dancer" could get approved for loans in excess of $500,000. Now apparently you have to own two blocks in downtown Manhattan for collateral and attend at least three $5,000 per plate "charity" dinners supporting your favorite politician (check the sub-clause; one of those dinners had to serve Endangered Chilean Sea Bass au Gore.) I can tell you that credit scores in the high 700's, no debt, and owning all your own assets doesn't mean shit.
So I must advise you strongly to do your homework on your lending institution. Just because they’re all licensed by the state and have a nice office with realistic-looking diplomas from the Las Vegas School of Business & Blackjack on the wall doesn’t mean much.
Rather than Crapital Mortgage Co., I would recommend a much more efficient lending institution known as Vito & Vinnie. They have a small office on Third and Elm; just look for a late-model white Cadillac with the trunk open. Be aware, as a rather exclusive firm, their business hours are limited, right around shift-change time for the local police department IIRC.
Their math always comes out the same way twice, especially if it involves the number of fingers broken. But at least you close on your new home the first time around.