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After the crash: Even Ben Bernanke can’t refinance his mortgage

Michael Babad
The Globe and Mail
Published Friday, Oct. 03 2014, 7:18 AM EDT
Lending troubles
In a country that gave us the housing crash heard ‘round the world, even Ben Bernanke is finding mortgage refinancing difficult now.

According to Bloomberg News, the former chairman of the Federal Reserve told a Chicago conference yesterday that “I recently tried to refinance my mortgage and I was unsuccessful in doing so.”
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As Bloomberg tells it, the audience chuckled. To which Mr. Bernanke responded that “I’m not making that up.”

In his talk to the National Investment Center for Seniors Housing and Care, the former chief of the U.S. central bank, which to this day still holds its benchmark interest rate at effectively zero, spoke of how it’s quite possible that mortgage lenders “may have gone a little bit too far on mortgage credit conditions.”

The big question, of course, is why Mr. Bernanke couldn’t refinance. And he didn’t disclose that.

The Dow Jones news service, however, speculates that his mortgage may be too fat to qualify for government support.

According to the news service, he and his wife bought the Washington home for $839,000 (U.S.) a decade ago and have since refinanced twice.

In 2011, when they last refinanced, Dow Jones said, they owed $672,000 and closed the deal just before the maximum to qualify for government backing was cut to $625,500 from $729,750.

Which means that Mr. Bernanke would need to pay down if he “hasn’t substantially paid down” the principal.

The New York Times, in turn, put it this way: Lenders now have to meet the loan requirements set by America's government mortgage concerns, Fannie Mae and Freddie Mac, and this amid heightened regulatory scrutiny.

So it all gets computed based on a variety of inputs. Thus, a computer would see Mr. Bernanke as having ended a long spell of employment, and so maybe he's deemed a greater risk. No matter that he's got a book deal and earns a bundle for his speaking engagements.

The whole point of his talk yesterday, Dow Jones said, is that even solid borrowers can run into trouble in the post-crisis era.

“The housing area is one area where regulation has not yet got it right,” he said. “I think the tightness of mortgage credit, lending is still probably excessive.”

http://www.theglobeandmail.com/report-on-business/top-business-stories/after-the-crash-even-ben-bernanke-cant-refinance-the-mortgage/article20906823/