“I tried to help my daughter to purchase a home with me as co-purchaser/borrower,” writes a reader, confirming our reports yesterday on what’s become a Bizarro World mortgage market.
“Look to buy with 20% down, 80% conventional loan. I was turned down because I did not meet their debt-to-income ratio even I have cash enough to pay for the house four times over, not to mention net worth in the mid-seven figures and credit score over 700. They cannot do ‘asset dissipation’ loan per new guidelines. They ONLY count ‘income.’ For a retiree like me, that means dividends/interest/rents. When did cash in the bank become an ‘unworthy’ asset?
“It got worse. The mortgage broker tried to obtain a ‘stated income’ loan (no, for me, it would not be a liar loan, since I disclosed everything fully). It was turned down because they only do liar loans of over $400,000. I asked for only $260,000. So it is more risky to provide a smaller liar loan than a bigger one? Give me a break.
“To get the house in time, I had to be the lender of last resort to my daughter. Instead of 10%, I could earn on something else, I am now earning 5.5% on her mortgage.”
She said "