Tuesday, July 9, 2013

It's broken...and it needs to be fixed

I'm not typically one to post negative thoughts or rants or raves that are slanted. So you know that if I do go off on a tangent, it must be pretty bad. I've just experienced first hand why our country has so many financial issues.

We've been working over the last few weeks with the mortgage company to get our loan approved. So as not to be sued for slander let's call them Snails Largo. As anyone who's been through the process knows, it takes an act of congress and about 10,000 trees to make it happen. But since we consulted with a mortgage broker BEFORE we started the process, we felt confident that we'd have no problem being approved. We also shopped around to find what would work best for our situation - a house that needed immediate renovations.

Prior to going in to the house buying process we had worked hard to pay off almost all of our debt  including our cars (there might have been a piddly few $100's on a credit card from a recent online purchase but certainly nothing substantial). Literally the only thing we had was our current house mortgage, which has been rented and thus covered through the rental income. Our debt to income ratio was very, very good. On top of that we have worked hard to ensure our credit scores are high (above 800). Should be no problem, right? Mortgage lenders should love us, right?


We had no problem getting through the pre-approval and the first approval with the underwriter. That's when the brakes stopped. Really it felt more like a head on collision.

Just one day back from being home from vacation we get a note from the lender.  They say they can no longer count a chunk of money in our savings account because it was a gift. We've discussed this with them before and even provided them with a signed letter from the giver and a copy of the check (it was given to us before we even found the house) and they were happy with the justification.

Upon further review (final underwriting), they decided that this money is not allowed to count towards our "liquidated cash" that is needed to put 5% down. They also were not counting any rental income we've received thus far (deposit and last month rent) despite me asking what paperwork they needed to show it was valid and "traceable".

I explained why we don't keep a ton of cash in our local account (we pay cash for most everything and use Dave Ramsey's envelope system) and that we had just paid off debt and thus our savings wasn't extremely high...but that's also why we had the other money that they decided not to count. Seriously, we have more than the 5% required to put down sitting in our account.  

Their solution? Take out money from our 401k. Never mind the same amount and more is sitting in our savings account. They want to see that it came from some other source in order to "count it." At one point they even told me that I couldn't even make a cash deposit (from our envelopes) to use because it was untraceable too. 

I even asked "so because we've been fiscally responsible, that's not good? It'd be better if we had more debt?"  Their answer "in this situation, yes." They freely admitted they didn't review it appropriately the first time but were also clear that it doesn't change their decision.

It completely boggles my mind that in our country, those with high debt but make regular payments are better off than those who have worked hard to have no substantial debt. Since when did we become a country that doesn't reward those who are fiscally responsible? Or have we become so warped that having high debt is the new "American Way"? I'd love to know how much Americans spend annually in just interest alone.

Someone told us today that we aren't the ideal candidates for banks because it's obvious we are likely to pay off our loans quickly and also not default, hence they make less money and can't charge us any random fees.  

Whatever the reason, I'm confident it will work out and we've already taken steps towards a solution despite the Lender's lack of assistance. Sadly, this has showed me just how far away we've gotten from the Godly values our grandparents once had where one lived within their means. And don't even get me started on the other values we've fallen away from...that's a post for another day.

The system is broken...and it needs to be fixed. Can I get an AMEN?

No comments:

Post a Comment