[stray kitten]

Originally Posted by Innoc

My wife and I each have homes we owned prior to marrying. Neither house can be sold as the current market value is below the loan. We are renting the homes to tenants until such time as the market changes. When we explored buying another home for ourselves FHA and VA underwriters for both programs disallowed the use of rental income to offset the mortgages for the existing homes. Additionally the underwriters required that 6 months of cash reserves be on hand for each and every mortgage including the new one. On top of that IRA, Stocks and other assets could not be used to satisfy those reserve requirements. In our case we're talking somewhere around 70K....just sitting liquid. The track record of rental history, responsible financial behavior by both of us do not matter. This is the result of the new "buy and bail" policies that have gone into place. Like Stray Kitten said...they've gone from ridiculously loose to ridiculously tight.

So, how did we buy our new home? I ended up taking advantage of a benefit I never intended to use...in the 20 years since I completed my enlistment I've never even thought of my VA benefits. VA is the only mainstream home lending program whose underwriting policy does not include a buy and bail provision. I hear that it's coming....but it's not here now.

Bad policy and implementation replacing bad policy and implementation. Frankly I think the real problem is we continue to place career politicians in the highest offices in the land. Even those who claim expertise that makes them suited for a committee appear to have no useful impact on the direction of policy.

Failure is an opportunity for learning. Whether a bank or the Congress...any process that insulates the subject from it's failures is a bad process.

When it becomes difficult to buy a mortgage on the "open" market, that VA benefit really comes to light. Back when mortgages were 14 percent people joined the military just to get it. In the current environment you, a normally solid borrower are now considered a "toxic asset" even if your loan is performing.

I would just like to refi my house. I am Joe the Plumber or Mr. Main Street in a fairly high interest rate loan by todays standard. However. since I am middle class, I cannot qualify because of the loan-to-value ratio and all the bail out plans or loan modification Obama plans are outside my reach. No bank is going to refinance a "toxic asset" even though I have never been late on this mortgage payment in my life. It's frustrating.

Here is how the federal government works, right now through legislation it is financially BETTER for me to stop making my loan payment for 6 months, start crying and wine a little to some gov peeps, then get a loan modification that will save me thousands a year. Too bad I still have some digity. Dignity costs a person a lot of money these days.