Mood of the Market
4. Looking for tricks and shortcuts to sound financial principles. A homeowner I know recently told me that he'd applied over and over for a loan modification (on a mortgage vastly outsized to what he can truly afford, by the way) and was frustrated by the repeated rejections he'd received. The specifics of the situation suggested to me that it was not that he failed to show a sufficient hardship, but more an indicator that the subprime-era mortgage was simply set up to fail because the home was more than his income would ever be able to sustainably support.
As I tried to advise this young man, he said in exasperation: "I know they just want me to say the right numbers, but no one will tell me what they are. I need an inside connection!"
As I see it, one of the worst impacts on the housing-consumer populace of the subprime era and late-night "get rich with real estate" infomercials has been the creation of the sense that it is acceptable, even savvy, to game the mortgage system to get your short-term real estate goals met, at any cost.
Sometimes, situations arise in which you may have to go to great lengths or leverage your agent or mortgage broker's relationships or expertise to get your mortgage application approved or to get your loan mod application through the bowels of your lender's loss mitigation maze.
But engaging in paperwork or document trickery with the specific intention to subvert the core financial standards and affordability principles that were once built into loan-qualifying guidelines has turned out to be more harmful than helpful, on net, to American homeowners.
Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
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