http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=07&year=2009&base_name=nyt_totally_flubs_story_on_mor
NYT Totally Flubs Story on Mortgage Market
A well-off young doctor will have to wait another year to buy a home -- did you ever hear anything so tragic? The NYT ran a misleading piece on the mortgage market, wrongly extrapolating from the experience of a relatively well-off young doctor.
According to the NYT, the doctor makes a six-figure salary, but because she just started earning an income of this level, banks won't issue a mortgage. They want to see two years of tax returns.
The NYT then tells readers that this doctor's experience are: "but far from unique, brokers and agents say." Actually, they are not far from unique. The number of people who just started earning six figure salaries, who previously earned little, is trivial.
Furthermore, we have a very good measure of the extent to which potential homebuyers are having trouble getting mortgages. Every week, the Mortgage Bankers Association puts out an applications index. It has been at very low levels all year. If creditworthy people were having trouble getting mortgages, then this index would be very high, since applicants might have to put in two or three applications for every one that is approved.
In short, this article's assertion that there is a tight mortgage market has no foundation in reality. We have very good data indicating that the vast majority of mortgage applicants face no serious problems getting loans.
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Response by Riversider
about 17 years ago
Posts: 13573
Member since: Apr 2009
idea for an article. a few anecdotes and no statistics
No one is advocating a return to the lax lending standards of 2006, when buyers with no income or documentation could get loans. But many people say they believe lenders and the government, in correcting the excesses of that era, have gone too far in the other direction.
NOW HERE'S AN IDEA. IF THESE PEOPLE THINK GOOD CREDITS ARE BEING TURNED AWAY. WHY AREN'T THEY FORMING PRIVATE POOLS OF MONEY AND LENDING THEMSELVES?
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Response by NYCMatt
about 17 years ago
Posts: 7523
Member since: May 2009
"According to the NYT, the doctor makes a six-figure salary, but because she just started earning an income of this level, banks won't issue a mortgage. They want to see two years of tax returns."
I don't know about her inability to get a mortgage, but she wouldn't get past my building's co-op board for the same reason.
Doctor or no doctor, we need to see at the very least two consecutive years of earning a salary (SALARY, that is -- not including "bonus") that can support the apartment he or she is trying to buy.
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Response by Riversider
about 17 years ago
Posts: 13573
Member since: Apr 2009
N.A.R. has been making noise trying to push for lower lending standards. The Times has done a terrible job pointing this out or referring to published statistics when making their points. The article is nothing more than a bunch of brokers opining.
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Response by falcogold1
about 17 years ago
Posts: 4159
Member since: Sep 2008
She's a dentist for 2 minutes. What if she sucks? What if her interpersonal work habits winde her up on the street. She has been a student for how long??? Does she have any experience with manageing money? I have a profession that kept me out of the work force until my early 30's. When I entered the work force I went from pauper to 6 figures in one day. took me about 3-4 more years to learn to manage it. It looked like a lot in the begining, it ended up not being so much. This is a GOOD plan, come back to me in a year...let's see if you can hold a job. A professional education is not an absolute in the world of finance.
Other than that the NYT is sinking to new levels of crappy journalism. I'd pay but, write me something thoughtful.
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Response by Riversider
about 17 years ago
Posts: 13573
Member since: Apr 2009
All good points. I don't think the economic security of the free world will be harmed if we make this just out of school dentist work for two years before getting her mortgage; Besides odds are that Mom & Dad would co-sign...
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Response by Fluter
about 17 years ago
Posts: 372
Member since: Apr 2009
Two years of tax returns was the standard requirement when we got our first mortgage in the 1980's.
That article also said no mortgages are available for self-employed persons, which is simply not true. People buying for investing purposes only are getting squeezed a little unfairly I think, but not people buying for their primary residence.
I also bristled when dentist said that now she has to rent, and renting is "throwing money away." Isn't teeth whitening also throwing money away? How about buying food?
As a society we need to stop dissing renters and renting. Housing is a necessity, and renting can be a lot smarter financially than buying in a lot of situations.
If dentist's chosen apartment has a price fall of another 25% over the next year, she'll be glad she had to rent.
{peaceful agent-to-be}
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Response by Riversider
about 17 years ago
Posts: 13573
Member since: Apr 2009
Title of the article displays the bias from the start..
"Tight Mortgage Rules Exclude Even Good Risks "
Article never adequately explains the basis for calling them a "good risk".
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Response by NYCMatt
about 17 years ago
Posts: 7523
Member since: May 2009
"Title of the article displays the bias from the start..
"Tight Mortgage Rules Exclude Even Good Risks "
Article never adequately explains the basis for calling them a "good risk"."
idea for an article. a few anecdotes and no statistics
http://www.nytimes.com/2009/07/11/business/11housing.html?ref=business
No one is advocating a return to the lax lending standards of 2006, when buyers with no income or documentation could get loans. But many people say they believe lenders and the government, in correcting the excesses of that era, have gone too far in the other direction.
NOW HERE'S AN IDEA. IF THESE PEOPLE THINK GOOD CREDITS ARE BEING TURNED AWAY. WHY AREN'T THEY FORMING PRIVATE POOLS OF MONEY AND LENDING THEMSELVES?
"According to the NYT, the doctor makes a six-figure salary, but because she just started earning an income of this level, banks won't issue a mortgage. They want to see two years of tax returns."
I don't know about her inability to get a mortgage, but she wouldn't get past my building's co-op board for the same reason.
Doctor or no doctor, we need to see at the very least two consecutive years of earning a salary (SALARY, that is -- not including "bonus") that can support the apartment he or she is trying to buy.
N.A.R. has been making noise trying to push for lower lending standards. The Times has done a terrible job pointing this out or referring to published statistics when making their points. The article is nothing more than a bunch of brokers opining.
She's a dentist for 2 minutes. What if she sucks? What if her interpersonal work habits winde her up on the street. She has been a student for how long??? Does she have any experience with manageing money? I have a profession that kept me out of the work force until my early 30's. When I entered the work force I went from pauper to 6 figures in one day. took me about 3-4 more years to learn to manage it. It looked like a lot in the begining, it ended up not being so much. This is a GOOD plan, come back to me in a year...let's see if you can hold a job. A professional education is not an absolute in the world of finance.
Other than that the NYT is sinking to new levels of crappy journalism. I'd pay but, write me something thoughtful.
All good points. I don't think the economic security of the free world will be harmed if we make this just out of school dentist work for two years before getting her mortgage; Besides odds are that Mom & Dad would co-sign...
Two years of tax returns was the standard requirement when we got our first mortgage in the 1980's.
That article also said no mortgages are available for self-employed persons, which is simply not true. People buying for investing purposes only are getting squeezed a little unfairly I think, but not people buying for their primary residence.
I also bristled when dentist said that now she has to rent, and renting is "throwing money away." Isn't teeth whitening also throwing money away? How about buying food?
As a society we need to stop dissing renters and renting. Housing is a necessity, and renting can be a lot smarter financially than buying in a lot of situations.
If dentist's chosen apartment has a price fall of another 25% over the next year, she'll be glad she had to rent.
{peaceful agent-to-be}
Title of the article displays the bias from the start..
"Tight Mortgage Rules Exclude Even Good Risks "
Article never adequately explains the basis for calling them a "good risk".
"Title of the article displays the bias from the start..
"Tight Mortgage Rules Exclude Even Good Risks "
Article never adequately explains the basis for calling them a "good risk"."
"Good risk" = white and professional.
Good risk = that which produces a commission