I’m going to tell you how the election of 2016 will decide the fate of the housing market, your ability to get a loan, and change the BLM movement from Black Lives Matter to something far worse.
And it all starts at my local bank.
I recently spoke with a mortgage professional about getting a home loan. As a person who’s been ‘in the business’ for some time now I have enough knowledge to effectively pester my loan officer but not enough to be helpful.
Back before the crash of mortgage backed securities it was a very simple and straightforward process: if you have money then you can get a loan. If you have money but in a non-traditional way, getting that loan will take more work on the part of the mortgage banker and you will pay a higher fee.
In other words, you had a choice.
If the mortgage banker had to spend 12 hours to get your loan done here, it would cost you more money to get the loan but you would get the loan.
This is like when you get a car that takes more time to build, like, say a Ferrari, versus another car like, well, a Nissan Maxima. The Ferrari will cost you more money. This is generally how the mortgage business worked… until now.
The 2013 passage of the 541-page Loan Originator Rule made the entire process much less attractive for mortgage bankers.
Compensation is now generally the same. This means that anyone with a “more difficult” loan will pay the banker the same as a person with an easy loan.
A guy with $120,000 in W-2 compensation. Easy.
Another guy with $45,000 in mixed up 1099 income. Hard.
A guy with good credit. Easy.
Another guy with bad credit. Hard.
So the Ferrari car salesman is being told that he has to go fetch coffee, watch their customer’s poodles, and make sure that the shoe shine machine is fully functional, but now get paid the same as a salesman for that Nissan dealership with the gum under the metal desks in the lobby.
Guess what happens? People leave the business, especially people who possess the knowledge to get those more complicated loans through.
This leaves the lower-level and less experienced mortgage bankers to fight over what easy loans they could find, shunning the more complicated ones.
So who gets shunned? Bad credit people. Bad neighborhoods. Anyone with government income, making the loan more complicated.
And besides, now the loan officer has to personally guarantee that the customer has “the ability to pay the loan back.” What does that mean?!
No one really knows, but a loan officer that finds themselves giving a loan now that defaults in 10 years might find out.
This, too, contributes to the pending mortgage crisis and the frustration of people with bad credit who live in bad neighborhoods will be at an all-time high.
Enter the election of 2016.
The Black Loans Matter crowd rises up as civilized spokesman for a change, and either fights the Republican president or helps the Democrat president further advance the cause of communism.
Student loans were seen as taking advantage of poor people; solution: government control.
Healthcare was seen as taking advantage of poor people; solution: government control.
After the 2016 election, the mortgage process that was broken by the 2013 reforms will find victims to barricade every bank, realtor office, and small mortgage brokerage in America until control is finally given up. Choice will be eliminated and ObamaMortgage can save the day.
ObamaMortgage could start by pooling equity in all homes, make it fair for you to share equity in all properties on your block, in your subdivision, maybe in your city.
This communal property will ensure fairness until such a time as one community has more equity than another, then the federalization process will come in to “fix” the failed communist solution at the local level.
So prepare for the coming mortgage crisis by not keeping too much equity in your homes. It may become the property of someone else.
Image: https://www.flickr.com/photos/fibonacciblue/17130711447; CC by 2.0