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Getting a Mortgage Shouldn’t Be This Hard: Housing Finance Gets ‘Taken to Task’

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In his State of the Union address, President Obama called for Congress to pass a mysterious, miracle plan that would allow all Americans under water on their mortgages to refinance, saving around $3000 a year each.

The next day, Ben Bernanke talked about "problems in housing finance" as one reason why the Fed's super-easy monetary policy has struggled to revive the economy.

Which bring us to another edition of Taken to Task...

Everyone knows the housing market is a huge key to the economy. As long as housing remains weak, millions of Americans will find themselves under a crippling debt load and unable to move to where they can get a better job because they're anchored to a house they can't unload.

To date, almost all of the government's programs - from HAMP to the Fed's zero interest rates -- have focused on trying to help downtrodden people refinance to lower rates, or to get principal write-downs in the hardest hit markets. And the President also launched a new financial crimes unit to investigate abusive lending and fraud in the selling of mortgage-backed securities that led to the financial crisis.

I'm all for going after the bad guys but wish the President was more worried about what's happening TODAY vs. what went down 6 or 7 years ago.

I mean, have any of these government officials tried to buy (or sell) a house lately?

I have and I can tell you the paperwork is an absolute nightmare. I get that banks abandoned all lending standards during the boom. But now the pendulum has swung way too far in the other direction so that even "responsible" borrowers are having a hard time, which is putting a major drag on the everyday, run-of-the-mill buying and selling of homes.

The housing market is becoming just like your local high school: the troubled kids and the advanced students get all kinds of attention. But for those of us in the belly of the housing market we're being overlooked. In plain terms, the housing market is constipated and, instead of providing a laxative, policymakers are trying to cure athlete's foot.

So I'd like to take policymakers and politicians to task for failing to look out for those of us who play by the rules and DON'T need a bailout -- we just someone to give the banks a gentle nudge (or kick in the rear) to help get lending going again for the rest of us. I'm talking to you, Ben Bernanke.

'American Dream', Interrupted

So here's my story: After looking for over a year, my wife and I found a house we liked. Our bid was accepted and we set about to get a loan...and that's when the fun really started.

We're very fortunate in that we both have good income, solid credit ratings and some assets in the bank, enough to put down 20%. After a few rounds of what seemed like normal requests, things started getting weird. The bank wanted additional documentation for my wife's income -- she's self-employed, which means they basically viewed her like an undocumented illegal alien.

There seemed to be no end to these requests and the seller started getting nervous because it was taking so long for us to get a mortgage commitment. We thought about finding another lender but that would mean starting from scratch and time was an issue.

We may still end up getting the deal done, but now I fear we've begun a daisy chain of negativity that could scuttle at least three pending transactions -- including the sale of my house -- and prevent $1000s of related expenses "normal" people typically incur when they move from one place to another; expenses that help the broader economy by putting money in the pockets of movers, realtors, contractors, furniture salesmen and the like.

So I'd like to take our lender to task for dragging its feet and generally keeping us in limbo for what seemed like months. Our lender happens to be a community bank in NJ you've probably never heard of, but I've heard similar stories from viewers across America and encourage you to share your experiences in the comments below or via email.

Ask anyone involved in housing financing these days and they'll give you an earful about all the deals that shoulda got done but were scuttled by some overzealous loan officer who seems to think banks are in the business of NOT giving loans. And if Newt Gingrich is right that Dodd-Frank is to blame and stopping community banks from lending, then hell yes we should repeal that law -- or Occupy Congress until they amend the bill.

To everyone involved in the home financing system who's holding up the works, keeping responsible, tax-paying Americans in a maddening holding pattern and preventing the housing market from working itself out, you've been Taken to Task.

See also:

Taken to Task: Capt. Cronyism, Hank Paulson

Taken to Task: Ben Bernanke and His Bankster Buddies

Taken to Task: A Poverty of News, an Embarrassment of Media

Taken to Task: Occupy Wall Street's Nattering Nabobs of Negativity

Taken to Task: The Cult of Warren Buffett

Taken to Task: Jamie Dimon's House of Ill Repute

Taken to Task: 'Free Market' Champions Go Begging for Bailouts (Reprise)

Taken to Task: President Obama Needs to Back Elizabeth Warren

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com.

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