The Banking Industry’s War Against the American Homeowner
Or, How to Go Insane Providing Paperwork
The mortgage departments of American banks, savings and loans and credit unions have declared war on the average American who is desirous of owning a home. The great American dream of home ownership has been a nasty, contentious, overwhelming, adversarial battle that can, for some home purchasers, last up to sixty days. And we are not talking about sixty days of sending over expected documents such as pay stubs, tax returns and bank statements. We are talking about sixty days of writing letters explaining deposits, re-explaining deposits, explaining earnest checks, sending multiples of the same documents and on and on and on and on.
It is a wholly nightmarish situation caused by the banks themselves during the go-go 2000's in which so-called “Ninja Mortgages” were granted to people who had no job, no income and no assets. And now, the responsible party in this catastrophe makes the average American homeowner “pay” for the banking industry’s ineptitude.
If you want a home in 2013, even with a larger down payment, prepare to experience one of the most excruciating time periods of your life. Prepare to hand over chunks of your work day and your family evenings to creating “detailed” documents to fulfill obtuse requests that often make no sense at all. These document requests often come from individuals who have little to no training in the mortgage industry but are the “communicators” for the underwriters because, god forbid, you talk to the underwriter.
To make matters even worse in 2013, communication is often “streamlined” through websites high on user interface and low, very low, on actual content regarding the process. These same websites, intended to expand communication, often cause the prospective homeowner to log in multiple times a day in order to find out what request for additional paperwork may be waiting to fulfill.
According to a June 24th Bloomberg News article, “While credit may be opening, the process of getting a new or refinanced mortgage remains frustrating, because lenders are making more meticulous demands for evidence of borrowers’ finances.” Again, the banks remedy for a disease they caused is to produce a great deal of pain for the consumer. Bloomberg goes on further to state “Lenders raised standards after the housing crash compelled the government to rescue Fannie Mae and Freddie Mac and bondholders forced them to buy back faulty loans. In all, poorly underwritten mortgages have cost five banks — Wells Fargo, Bank of America, JPMorgan Chase, Citigroup Inc. and Ally Financial Inc. — at least $94 billion in the six years ending 2012.” Doesn’t that make you feel vast amounts of sympathy for these large banks and their faulty business practices? They got the type of customers they pursued and now the American homebuyer in 2013 has to pay for their idiotic business schemes.
In procuring a mortgage, banks put their friendliest people on the front lines with extensive amounts of customer service training. The encourage you and coddle you. They make you feel wanted. They make you feel needed. They cajole you in to thinking it will be a simple process. This person is NOT your friend. This person works for a money-making entity that has quotas to meet and sales growth targets to hit. Their job is to lure you in to this very vast web of miscommunication, requests, denials, lack of response and the production of paperwork. Once you lock that loan rate, you are locked to this company for the next however many days. And the nightmare will begin. The spider has you in his web.
This is what has become wrong with America. We are sold a bill of goods, in this case home ownership, and then are rung out so tight through the ringer, that the consumer is exhausted with the process. This process is so vague that the consumer can often be kept in the dark until minutes prior to the closing process without knowing closing numbers. Why? Because it doesn’t matter. They have you. You are at their mercy. You are in so deep that if you want that living room, that eat-in kitchen, you will do what they tell you, when they tell you and how they tell you. It’s the American nightmare sold as the American dream.
One of my favorite lines regarding the famous pre-approval letter many receive from lenders comes from Mark Greene in a Forbes article. He states “Often, the pre-approval call is the very beginning of the lender courting process and most borrowers don’t like to kiss on the first date. Mortgage people see it as the first date in the courting process with new buyers.” The American dream as an awkward first date, isn’t that fitting.
In another article for Forbes, Mark Greene states “The reason the mortgage approval process is now so rigorous is simple. Avoiding defaults and loan buybacks has become the primary goal of mortgage lenders.” He’s right. It’s not about the consumer anymore. It’s about preventing, at great cost to the consumer’s satisfaction levels, what the banks themselves created. He goes on to state that “So when your lender requests specific documents from you, give it them just ‘because they said so.’” Oh Mark, if it was only that simple on the consumer’s end. Because it is rarely so simple when requests come from poorly trained customer service representatives or via poorly written email or via computer generated and homogenized emails.
The American homeowner has to earn that home they live in or want to purchase … in more ways, many more ways than just working hard each day at career and family. So plan on scanning, faxing, copying every shred of your financial life for the entire timeframe of your closing and you will be prepared for this process. Plan on living a hermit as you fret about every purchase, every deposit, every bank statement and you will be prepared for this process. Plan on feeling like a criminal from your friendly underwriter and you will truly feel ready for pursing the great American dream of home ownership. Because that’s how it is in America now because they say so.
