Mortgage News Qualifying Versus Affording

by Jill
(California USA)

Regarding Mortgage News - Qualifying Versus Affording: Remember Jill who has shared views on mortgage news with us? I think she outdid herself with this one. You can read more from Jill by following the links after this contribution. --Kate Ford


Hi Kate, you bring up a good point, the distinction between qualifying for a mortgage and affording a mortgage.

I think both need to be in play.

1-- Guidelines that help as many as possible buy homes, such as programs designed to assist the first time home buyers.

2-- Then having constraints speaking to affordability.

I don't necessarily claim the need to return to the "good old days" of more stringent qualifying standards however there must be a balance somewhere between.

Our society with its leaders tend to have a herd mentality and tendency to find blame. I think of it as a clock pendulum that swings too far in either direction.

When the rules were relaxed in the 90's it had a laudable goal, to increase house ownership and open up the American dream to many.

So while I don't like to use the word "blame", I prefer the notion of "responsibility".

But many on the mortgage lending side as well as many buyers were not being responsible, by looking away from the downside risk as manifested in the mantra that housing values will continue to rise.

There were many programs with incentive just too great on the commission side to pass up. I am not talking about the agents who insisted on doing the right thing for their clients, I'm referring to agents who only saw huge dollar signs.

Not to forget the damage by "the smartest people on the block" that came from selling CDO's around the globe. It turned out that their "risk assessment" models were wrong.

And the selling of credit-default swaps? BAD BOOGEY!

So when the house of cards began to fall many decisions were exposed. That exposure caught the good, the bad, and the ugly.

Many people had made responsible decisions based on correct facts, due diligence about their finances, etc.

But as I tell my husband sometimes good decisions have bad outcomes. Why? Because the world is not deterministic but probabilistic.

And by the way, the good old days to me is "save for a rainy day, pay yourself first, and live below your means".

Tough issues! Jill

Kate Answers: Mortgage News Qualifying Versus Affording

Jill has shared with Readers of several times. You may enjoy reading her other contributions here.

Contact Kate - Help For Homeowners and First Time Home Buyer Mortgage Advice



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