Hacker News Reader

Comment by jdpedrie | Hacker News Reader

As a layman (though I worked in the mortgage industry, it was as a software developer fairly distant from underwriting), I've long considered it an unfortunate development that manual underwriting had fallen by the wayside. Now, as a self-employed developer, I've seen how difficult it is to obtain a refinance mortgage without a W2.

That said, the example used in the article seems frightening. A $600,000 mortgage on a part time student income where the borrower is forced to rent rooms to make the payments? However unfortunate the normal underwriting standards are for some portion of the population, it seems that lenders continue to take whatever rope they are given and insist on hanging themselves with it.

View on HN

Read to the end...the example the WSJ used was not a normal situation. Shame on them for trying to use this person's story as an example of the "new normal." Hardly.

She used the money to fully buy out her grandfather’s house in San Clemente, Calif. She jointly inherited it with other relatives and said she needed a loan to pay them for their shares of the property.

Read the middle of the article where they clearly state "While that makes up less than 3% of the $1.3 trillion of mortgage originations over that period, the growth is notable because it came as traditional home loans declined."

Unconventional is anything that is not underwritten in a conventional manner. A situation where you inherit a property and take out a mortgage to pay out others with shared inheritance in a property is almost certainly not representative of the underlying reason for the growth in the 3%. If the author is trying to imply a rebirth in reckless lending that caused the last recession then I'm arguing they picked the wrong subject. If it's because they couldn't actually find a subject that definitely should not have been given a mortgage then the entire premise of the article is wrong.

But that doesn't change the fact that this underemployed person still owes $610K.

It says at the end, she'll rent out the rooms. San Clemente is in prime beach front Orange County. 1) She will be able to rent a single room for at least $750-$1000. 2) The property is in a highly desirable, wealthy area and will likely continue to grow in value over time. 3) Her earnings will grow over time once she graduates.

That's a lot assumptions... 1. that she'll be able to rent the rooms 2. she'll be able to get a job where she lives.

I'd be scared s* if my $610K mortgage depended on getting a job and renting out multiple rooms every month.

Are you able to obtain a mortgage using your average income reported on the last two tax returns? Or how does it work for self employed?

Reply on news.ycombinator.com