Have banks gone too far in tightening their hold on lending practices? There was a real-head-scratcher in the LA Times last week written by David Lazarus, one of their most able real estate observers.
Here's some of it:
"One reason we got into our current economic mess is because banks handed out home loans to pretty much anyone with a pulse, regardless of their ability to, you know, actually make mortgage payments."
Banks have subsequently tightened their lending practices, which is a good thing. But have they gone too far?
Glendora residents Angie Trujillo and Carl Heinzen think so. They're still trying to figure out why they got turned down for a refinancing of their mortgage. Before we get any deeper into their story, you should know that Trujillo, 61, is no stranger to the world of banking. She worked for Bank of America for nearly 40 years, rising from switchboard operator to assistant vice president. Trujillo was shown the door in March, not long after BofA announced that it would be sacking as many as 35,000 employees over three years to cope with the recession.
Trujillo and Heinzen, who are married, applied for a refi several weeks before she lost her job at the bank. Considering Trujillo's long history with BofA and the fact that their loan was already with BofA, they figured the refi would still go through without any difficulty. But in August, they learned it had been rejected. The reason, according to the letter they received from the bank: "Income insufficient to support expenses."
Apparently BofA decided not to take into consideration the $58,000 severance package Trujillo received from BofA along with her pink slip. Or her $377,000 BofA pension. Or her $156,000 in savings at BofA. Or the $10,000 she and her husband deposit at BofA monthly for rental properties they own and manage. Not to mention the $450,000 value of their house, as appraised by BofA for their current BofA loan of $280,000.
Oh, and let's not overlook that Heinzen's FICO credit score was 809 at the time of their refi application and Trujillo's was 764, placing them among the least-risky loan seekers in the country.
Kind of makes you wonder: If people like Heinzen and Trujillo can't get a home loan, even for just a refi, who can?
Liz Miller, Just Call Liz for your Lake Havasu real estate needs
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