AARP Article

[MissMolly]

AARP reports that Fannie and Freddie will now allow lenders to take retirement assets into account when qualifying for a refinance.

http:// http://www.aarp.org/money/credit-loans-debt/info-08-2013/mortgage-break-for-retirees.html?cmp=NLC-WBLTR-NMCTRL-090613-TS2&USEG_ID=

 

[imoldernu]

Link didn't work for me... is this the article?:
Refinancing Your Mortgage on a Fixed Income - Work and Retirement - AARP

I faced the same kind of situation at Sears... being rejected for credit because the "shown" income was too low. When I called and questioned them at their home office, they told me it was policy not to offer credit if the "income" was too low. They never checked my credit score which is near 800 or asked about other assets. They also didn't apologise for the public rejection. Their loss.. but ya can't fix stupid.

... and this from a former member of their management team... (sigh)

 

[MissMolly]

Link didn't work for me... is this the article?:
Refinancing Your Mortgage on a Fixed Income - Work and Retirement - AARP

I faced the same kind of situation at Sears... being rejected for credit because the "shown" income was too low. When I called and questioned them at their home office, they told me it was policy not to offer credit if the "income" was too low. They never checked my credit score which is near 800 or asked about other assets. They also didn't apologise for the public rejection. Their loss.. but ya can't fix stupid.

... and this from a former member of their management team... (sigh)

Yes, that's it. Thanks for fixing it

 

[pb4uski]

It is sort of laughable that they didn't consider assets in the past. How may people would chose to lose their house if they could tap into retirement assets to save their home?

I concede that those other assets are not security for the loan like the house is so a lender can't force a borrower to use those assets to keep current but if they have any equity in the house they would have an incentive to tap other assets to keep their payments current.

 

[Katsmeow]

The article is interesting but it is also a bit of overhype. Even before this, income from an IRA could be considered as income as long as you were taking systematic withdrawals. It is pretty easy to set up the systematic withdrawals (we did this last year, there was no requirement to even continue the withdrawals). This was all under Fannie guidelines.

 

[Tadpole]

Actually, that surprises me. Do F&F think the laws will change such that retirement assets can be seized in foreclosures and other legal actions as easily as other assets? Without some protection against lawsuits/unaffordable debt, personal savings for retirement ceases to work so well.

 

[LakeTravis]

In terms of ability to repay, I've never understood how $1M in the bank is LESS secure than a six-figure income that could be lost the day after closing.

 

[unclemick]

Hmmm - I had that problem post Katrina(2005) when buying a house in Missouri - getting financing was a problem till I showed the realitor my retirement account. They found a place able to do the mortgage quickly after that.

heh heh heh - I still have to live til 95.

 

[rayvt]

Right. That's the thing. It's not that a 401K or IRA is used as security for the mortgage (which is legally not allowed, andyway).

It's that somebody with $500,000 in a retirement account is a low-risk borrower on a $300,000 mortgage.

 

[harley]

Hmmm - I had that problem post Katrina(2005) when buying a house in Missouri - getting financing was a problem till I showed the realitor my retirement account. They found a place able to do the mortgage quickly after that.

heh heh heh - I still have to live til 95.

You were lucky you did it before 2008 when all the mortgage companies and banks changed their process. Even though I could show assets in excess of 10 times the mortgage I was looking to refi, it took me almost 3 years to find someone that would do it because of basically no income. And even then it was only because my mortgage servicer sold their business to Chase and Chase was looking for people who qualified for the HAMP program to up their numbers. I hope I never have to do that again.

I only have to live til 87.

 

[pb4uski]

In terms of ability to repay, I've never understood how $1M in the bank is LESS secure than a six-figure income that could be lost the day after closing.

I actually refinanced after I resigned but while I was still on payroll. The morons confirmed that I was employed but were clueless that I would be unemployed shortly after closing the refi. They never asked and I never told.