Helping homeowners stretched too far
What's it like for consumers who are trying to get out from under mortgages they can't afford? Kai Ryssdal finds out from Fred Glick of U.S. Loans Mortgage in Philadelphia.
A mortgage application (iStockPhoto)
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TEXT OF INTERVIEW
Kai Ryssdal: To find out what it's like for consumers who're trying to get out from under mortgages they can't afford, we've called a mortgage broker. Fred Glick runs U.S. Loans Mortgage in Philadelphia. Mr. Glick, welcome to the program.
Fred Glick: Hello there.
Ryssdal: Who are you seeing come in to try to reset their mortgages?
Glick: Well, the people that I'm seeing are people who have really three things: Number one, income that they can document. Number two, equity in their property. And number three, decent credit.
Ryssdal: What about the people who have, you know, 800 credit scores but the value of whose houses have fallen so they're, you know either under water or barely positive, so they don't necessarily have the capital? If they came in what would you say?
Glick: You have to go through the appraisal process. And it's kind of silly because somebody is making a say $3,000 payment, they have 800 credit scores and they're not worried about the value of their house because they're not moving now. Then why can't they just make a $2,000 payment? This happened in the old, old, old days, when savings and loans used to hold the paper. You would just walk in, renegotiate the rate with them. Pay a little fee and they would just lower the rate. But now because everything is paid through securities sold to investors, there has to be rules and one of the rules is you have to have a current appraisal of the property.
Ryssdal: How's business generally? Are you seeing a lot of walk-in traffic?
Glick: It's quieter. We do a lot of Internet business and we usually get phone calls, most of our calls are from California. And a lot of times you're just telling people, I'm sorry I can't do this for you.
Ryssdal: When you tell these folks that you can't really help them, are they surprised at that?
Glick: Some are. We can do a little quick online check as to what the value of their property is and they go, 'oh my god, I thought it was worth 600 and it's worth 450.'
Ryssdal: If we had addressed the issue of mortgages and foreclosures, I don't know, a year ago, do you think all those securities that are backed by these mortgages would have been worth something and then we might not be in this mess?
Glick: Probably. But--the infamous but. Most of this problem dwells from the fact that the people who are on Wall Street would sell to say, the Norweigan Pension Fund, half a billion dollars worth of mortgages, and tell them that these are perfect, clean loans when they weren't. And so the people who have the money to buy these mortgage-backed securities now, don't believe the guys who are selling them the paper. So they have to come up with these stringent regulations that makes it more difficult to get the loans.
Ryssdal: Fred Glick runs U.S. Loans Mortgage. He's a mortgage broker in Philadelphia, Pennsylvania. Mr. Glick, thanks a lot for your time.
Glick: Thank you.
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