Posted at 10:22 AM on February 10, 2009
by Jeff Horwich
I'm in the middle of doing what they say no one's doing right now: Selling my home and buying a new one.
It's certainly not impossible, and still pretty fun once you get to the buying phase. But the market does seem a little slow. The main symptom we experienced is that there's just not that much to look at -- mostly lots of houses that were on the market before the big crash this fall, and still linger there because of some significant flaw.
That said, we sold our home quickly and did find just what we were looking for, at a great price (but if hadn't found that one...there wasn't much else). All told, it was kind of a blessed real estate experience.
But it was fascinating to hear about the drama behind the scenes when it came to getting our loan. Our swashbuckling (that's the best word I can come up with) mortgage guy apologetically described it almost like we had just witnessed Mommy and Daddy fighting: "I'm really sorry you had to witness that."
He had locked in a great rate while rates were at a nadir a couple weeks ago, and worked out a package where we could put 10% down and pay an up-front premium to avoid mortgage insurance. He used the lender's own guidelines to draw up the package -- it was open-and-shut.
But the lender, evidently, freaked. Thus ensued what I understand to be a series of shouting matches, slammed down phones,and flaring tempers, among our mortgage broker, the "processor" middleman, and the lending bank. I'd have never imagined such passion in something as seemingly dry as the mortgage business, but such are the times we're living in.
And who, you might ask, was the lender? Well, I actually won't mention the name, for fear it might jeopardize my loan (paranoid, yes -- but I'm not taking any chances). But it was one of the poster-children for reckless lending during the bubble. And despite what they and the industry are saying -- money is flowing, people with good credit can get a loan, the markets are functioning -- they are clearly chastened by the fall, to the point of being hyper-conservative and even ignoring their own stated guidelines.
In the end, our broker (who seems to love the mortgage business more than I can ever comprehend) wound up quoting the lender chapter-and-verse of their own guidelines, and they were forced to capitulate.
But it turns out those very guidelines are now being revised, and the rather humdrum policies we took advantage of to get our loan will disappear within a few weeks for new buyers.
And so the damage of the financial crash spirals out into the spring...
Sometimes one anecdote can be more informative on the economic situation we're in than a hundred reports covering the latest case-schiller numbers.
The crux of the issue is: given that lenders are being much more strict in their lending, who is going to qualify for loans to buy up all the excess real-estate built during the days of loose credit and rampant real estate speculation?
Maybe it's just me, but it seems like EVERYONE I know who gets a mortgage goes through some kind of similar minidrama. There is always some kind of last minute freak-out but it all goes through all right in the end. I am beginning to suspect the mortgage brokers put on this whole charade on purpose to make it seem like they are earning their cut and to make sure you come back to them next time you buy a house...