Wednesday, April 8, 2009

Kiss my Fannie Mae

Apologies to my loyal readers. Both of you. I have been on the schneid. I've been preoccupied with a number of pressing issues and have neglected you. I am sorry. But first, a bit of house-keeping:

I am soon to officially launch my new delicious art prints business Mishmish Studio so if you want to be part of the launch and get on my mailing list, which is opt-in only, then please go here. It takes three seconds. Then they send you an email to confirm (another three seconds). I promise to send only the occasional email announcing new designs, new collections or upcoming promotions. And I won't share your email with anyone ever ever ever, except for maybe with one nice Nigerian diplomat with whom I have been corresponding lately regarding a substantial sum of money...

Then you can help me create some buzz by forwarding your newsletter to anyone and everyone. Some suggestions: Oprah, Angelina Jolie, the Obamas, Ellen Degeneres, Martha Stewart, Madonna…he he.

But on to more pressing matters. I have two words for you. Fannie friggin' Mae. Yes, people. There is a reason why Fannie Mae, the supposed government-sponsored enterprise chartered by Congress with a mission to provide liquidity and stability to the U.S. housing and mortgage markets, is named Fannie. Because they are full of shit. I've been hearing for months about this making Home Affordable campaign and how it's supposed to help not only those poor people who are looking at eminent foreclosure, but also those of us who got caught in upside down mortgages after our home values plummeted. Yes, we are one of those people. Or so we thought.

The back story: we bought our home, which is technically a condo (that's another whole story), in April of 2004. It was a small fortune for a two bedroom but with a little bit down and a double mortgage it was affordable. Did we put down 20%? No? Was that a mistake in retrospect? Probably. But we made enough money to cover the mortgage and we weren't planning to stay long. So the 5-year ARM worked for us and we had a 4.25% rate so the world was our oyster.

But the market is a fickle bitch isn't she and when all went sour in the fall we started to think about refinancing because five years later we're still in this tiny house and it wasn't looking like we could sell it for as much as we bought it for. Not good. And we tried to find a mortgage lender to help us but everyone wanted an 80% debt to value ratio and we weren't even sure we had a 100% debt to value because home values had dropped so much. But the deal with appraisals is that you pay for them no matter if the bank is willing to give you the loan or not and they cost $500. Except for Bank of America which doesn't charge you if they don't end up giving you the loan but there's no guarantee they'll send an actual person to appraise the house. They may just do a "desktop" appraisal which means looking at comps, doing a calculation and spitting out a number. That would be bad news for us because our home is very unique. It's half a duplex so it looks like a single family home with a yards and all but in fact it's considered a condo. Though if I can ever reach Brian Lombard over at the County Office of Santa Clara, I might be able to change his mind about that erroneous designation.

What to do? All the while I'd been hearing how Fannie Mae would help millions with debt to value ratios higher than 80% (that's a magic number, as well as $417K. It's a little bit like being in LOST with all of the magic numbers). So I thought, OK, any day now the banks are going to start rolling out these new terms and we'll refinance and a great hush will come over the land and all will be content. So we waited and waited and meanwhile no official word came out but now we're getting calls that sound official except they're from schemers and liars and cheats trying to hoodwink an already down and out population by pretending to be associated with the government and wanting to help out soon-to-be foreclosed homeowners. What is wrong with you people? Did you not have parents? Did no one tell you that deception and thievery is wrong? Don't get me started. Too late.

So finally we just decide to bite the bullet and apply for a loan through the Stanford federal Credit Union because we trust them (non-profit), they only do walk-through appraisals (which only cost $250) and there's only like three guys who work there so we have their ear when we want it. We filled out all of the paperwork, set an appointment for Daisy the Appraiser (she's friends with Dora the Explorer) to walk-through and then prayed, literally prayed, for an appraisal of $525K which would give us an 80% debt to value ratio. I had everyone I know doing the $525K mantra. We even prepared a one-sheet for Daisy listing all of our home's improvements and virtues. And I coached my husband on what to say to her on the day of the walk-through. We actually practiced his little speech. Five agonizing days later we got the call. $525K. I'm not fucking kidding you. Daisy came through and our debt to value was 80%. This meant we could get a loan and we didn't have to pay private mortgage insurance on top of it. Woohoo.

But wait, the plot thickens. I go to seal the deal with my buddy Alex at SFCU and he tells me that because we own a condo, I either have to pay 3/4 of a point on the loan (that's 3/4 of a percent on the entire loan or $3,800!) or tack on a quarter of a percent to the interest rate. This is written nowhere on the website and was never mentioned in previous conversations. So I am livid. And I let Alex have it realizing of course that he is only the messenger but I can't help it. And why this new ridiculous stipulation? Because of, yes you guessed it, kiss my FANNIE MAE. As of April 1st all condos that don't have a 75% debt to value ratio have to come up with this extra cash.

So not only has Fannie Mae not helped anyone who's underwater, they're actually sticking it extra to the people who happen to be above water and want to do the right thing by getting into a normal and stable loan. Fannie Mae, you suck. You heard it here first. Go to hell Fannie Mae.

So this is where I've been. On the phone with Bank of America, Wells Fargo, Lending Tree (never use these people - they are a giant scam), Alex at the credit union, Brian Lombard's goddamn answering machine, Daisy the queen of all appraisers and Fannie Mae herself.
Anyway, our appraisal is good for three months so we'll be making some decisions soon. If Brian changes our house to a townhome or, even better, an attached single-family, then we're really in business. Of course, he'd have to return my phone calls for that to happen. Otherwise, we will just suck up the extra percentages points and refinance and continue to live out the American Dream, grateful that we still have a home at all.


Allison said...

Inner Toddler - I work at LendingTree and saw your post today. Is there anything we can do to help you? We'd another chance at your business. Please give us a call at 1-800-555-TREE.

Joe Burke said...

Advice from another mortgage lender: Refinance as soon as possible before they change the rules again. Also, you probably won't find another lender that will use your appraisal. They are all going to want there own. Use it before an underwriter asks for more comps. 90 days is a falacy today. Every time we say that guidelines couldn't possibly get tighter, they do.