Well I have another great story to tell about how crazy lenders are getting with their rules.  The lenders, and banks are not making many exceptions any more and sticking to the rules no matter how stupid they are.

The mortgage loan is for a Metro Detroit home in Grosse Pointe which is an upscale neighborhood outside of Detroit.  The borrower has 790 credit scores, makes between $150,000 to $200,000 a year and has a ton of money in her retirement account.  She bought a home with a first and second mortgage and refinanced it twice since she bought it.  The problem is that she once refinanced it into one loan at one time.  The bank now classifies her loan as a "cashout" loan because she is paying off a 2nd mortgage.  It doesn't matter that she has not taken any more money than what she paid for house.  The mortgage amounts still add up to be the same amount, but the bank won't give her a loan with PMI.  It is against the "rules" of this bank because southeastern Michigan is classified by their bank as a "declining market"   They can't do a "cashout loan with PMI in a declining market".   A declining market is a one that home values are falling.  The banks do not want to take a chance.  Many Metro Detroit Homes are in the declining market area whether it is Novi, Canton, Livonia, Detroit, Plymouth, Farmington Hills, Redford, or Northville it is the same to the bank.

So here I have a lady that makes tremendous money, has great assets in retirement funds and in the bank, great credit scores, not asking for more money, and reducing her payments by over $200 a month and the bank turns her down.  NOW DOES THAT MAKE ANY SENSE?  Just because they classify the mortgage as a cashout.  Even though she has never taken cashout of the home.

The bottom line is that banks are running scared.  They are afraid of losing money on Metro Detroit home loans.  So they are sticking by guidelines and rules no matter if it makes no sense at all.

I am lucky I am a mortgage broker that I can ship this to another lender and get the loan done.  Not all lenders are that stupid.  But it is getting harder to do mortgage loans in Metro Detroit and across the country because lenders are afraid of approving loans that are outside of the guidelines.  Not matter how good of a risk it is.  Rules are rules to some banks.

For more on Michigan mortgages, Michigan real estate, and credit scoring go to my website www.RussRavary.com