Business media are having a lot of fun
today over a throw-away remark Ben Bernanke made yesterday. In a question and answer session with Moody
Analytics economist Mark Zandi, the former Federal Reserve chair said he was
having a little personal trouble in the financial markets. "I recently tried to refinance my mortgage,"
he said, "and I was unsuccessful in doing so."
According to multiple reports, when the
audience laughed Bernanke insisted he was not making it up.
"Overregulation and the fear of buybacks makes it difficult to make a common sense loan, " notes Geoff Allison, a Senior Loan Officer at Blue Skye Lending.
"While there may have been a rhetorical goal underlying the comment, it's not hard to believe based on the current state of lending guidelines. A recent change to what is essentially a commission-based job with no recent history of working on commission would prevent anyone from getting a conforming loan," says Mortgage News Daily's Matt Graham. "Even though there are products that he could qualify for, they don't carry the same low rates as the more stringent programs."
Bernanke
made the remark in an appearance before a conference hosted by the National
Investment Center for Senior Housing and Care.
Zandi confirmed the remark to CNNMoney
and said, "It highlights how tight credit
is for residential mortgage loans. This
is the key constraint on the housing recovery."
Lending standards were tightened by
banks and regulators in response to the rapid deflation of the housing bubble
and, according to Bloomberg, Bernanke
said, "I
think it's entirely possible" that lenders "may have gone a little bit too far
on mortgage credit conditions." He
acknowledged that the first-time homebuyer market is not where is should be as
the economy in general strengthens. "The housing area is one area where regulation has not
yet got it right."
This is old news for market participants. Frank Hanna, an Originator at Gateway Funding sums it up "In order to truly help the housing market and ultimately the economy we
will need to see lending regulations strike a better balance between the
current defensive underwriting posture and common sense."
Bloomberg headlined its
report, "You want proof that it's tough to get a mortgage? While CNN went so far as to underwrite Bernanke's
loan. They found that he bought his
Washington, DC home in 2004, paying $839,000 and it is assessed today at
$880,700 although Zillow puts its market value about $80,000 higher. His $200K salary as Fed Chair is history but
he commands as much as $250,000 per speech, consults at the Brookings
Institution, and his last financial disclosure put his assets in the $1 million
to $2 million range (putting him way down the list of wealthy Fed Board
members.)
What we don't know is whether Bernanke
or Zandi made any real news yesterday.