Too Little, Too Late. A Friday Afternoon Rant.

Pop quiz  – when was the last time that the government at any level got something right?

Time’s up.

Did you come up with anything? Nope neither did I.

I wish that they would just STOP TRYING. I have finally come to the conclusion that INACTION on their part is the safest thing for us.

Forgive my rant. Let me tell you about my latest refinance nightmare caused largely by the antics of the Keystone Kops otherwise known as Fannie Mae.

On January 31 (of this year) I applied for a refinance loan on one of my rental properties. There was nothing special or out of the ordinary about this home. It was a standard build in an established and slightly upscale neighborhood. It had been renovated. I had owned it for over a year, and it had solid renters paying a rent rate that would leave a very nice spread after a refi. And to top if off I was only asking for a 70% LTV.

I have great credit, a strong history of managing rentals for a profit, a very solid corporate structure with superior legal representation, a year’s worth of cash reserves, and a great day job.

In short, I would think that I’m the kind of borrower that lenders should be running after.

But no. This particular lender (one of the largest in the country by the way) has treated me like a criminal every step of the way.

And what’s their excuse? Fannie Mae made me do it!

And the result? As of today, May 9th, I STILL don’t have any idea if my loan will even be approved.

I’ll spare you a review of the litany of inanity that has defined this process. My point, as I shake my head in amazement, is “why now?”.

The credit markets are already so screwed up because of the lack of adult supervision over the last several years that properties aren’t selling here at all. Are there people that would like to buy? Of course. But unless their credit is at walk-on-water levels then it doesn’t make sense for them to even try. And Fannie Mae is compounding the problem by tightening up their guidelines at EXACTLY the wrong time.

And so real estate markets everywhere languish.

I’m really not complaining, because the more that the federal and state governments act the worse the real estate market gets, which is actually good for contrarian investors like me.

But it’s disappointing because their pure political pandering is hurting tens of thousands of Americans when the right thing to do is nothing. That’s right – ABSOLUTELY nothing.

Why? Because that greatest of American creations – the free market – will figure it out. On it’s own, and the right way.

It always has, and it always will.

 

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  1. […] card in the form of a commitment letter, the rules changed. Fannie Mae (see my related post here http://dennisfassett.com/2008/05/09/too-little-too-late-a-friday-afternoon-rant/) decided in their infinite wisdom to downgrade Michigan to it’s third tier of risk. I know now […]