Financial Industry Has Not Learned From 2008
I purchased my current home in 2008, several months prior to the housing bubble bursting. At the time, I had steady employment, had no credit issues and had no expectation that I would run into any situation where I would have issues with my purchase. However, I found it weird that throughout the purchase process I was never asked to provide any definitive proof of my income. I was asked what my income was and I replied truthfully to the question. But at no time was I asked to provide copies of my W-2, copies of my bank statements, pay stubs, etc. In a previous home purchase in 1998 I was asked for all of those, so as I said I found it quite weird. In any event, my closing came and went and I’ve been happily living in my home with my family ever since.
The house bubble burst in late 2008, in large part leading to a commanding win by Barrack Obama. There was much demagoguing, grand standing, finger pointing, back peddling, evasion, and a host of regulations and laws to address the many issues that lead to it. However, one thing does not seem to have changed. Something that was key to the bubble in the first place. I recently refinanced my home and I did so without having to provide proof of my income. Again.
Yes, I have very good credit. No, I’ve never missed a mortgage payment. My home is not encumbered by liens or secondary mortgages. I have a good income to debt ratio, and I’m steadily employed. But despite all that I find it outrageous that banks – MAJOR BANKS – are still not requiring borrowers to prove their income through W-2’s, pay stubs, and bank statements. I mentioned several times during the Refi process that I have proof of my income and was ready to submit it and was told it wasn’t necessary.
That is, in part, what lead to the bubble in the first place. Borrowers borrowing for homes they couldn’t truly afford, using gimmicks and ARMs to do so and without having to actually prove they could afford their perspective home. When push came to shove and interest rates began to increase those risky borrowers were very quickly pushed out of their homes when they couldn’t afford their adjustable mortgages. And we, the responsible tax payers were left with the bill.
How long again will it be before we’re right back where we found ourselves four years ago in order to acquiesce to Democrat demands that everyone afford a home?