It will take away from subs.
My wife and I have perfect credit, 790 scores for both of us, great incomes but we get turned down all the time.
I have to call, every single time, to explain to them, talk to a manager, etc...
Some of the more creative mortgages out there are not technically a mortgage. So they get reported to your credit bureau as a credit card.
So we had a 360K credit card show up on our credit report, maxed out....instant deny from everyone and unless I get someone with a clue then we don't have much luck.
I spent 45 minutes on the phone with someone from Citibank over a car loan until I finally got ahold of a manager who knew exactly what the problem was and set everything up.
Most interest only/ARM loans are reported this way. The credit companies just need to catch up with the times and we all know thats going to happen
I'm still fighting my insurance company. They, and so do most other banks, use a Risk Score, which has to do more with debt to worth value than anything else. Homes generally wash, you are usually under the curve as far as loan to value. However since these types of loans do not show as mortgages, so your instantly X number of dollars in the hole because to them it looks like the monies are unsecured.
The insurance company says I am a B risk, compared to A being perfect, because of my Risk Score, apparently I'm more likely to commit insurance fraud and they give me the BS answer "Well sir that is the system and there is nothing we can do" If it was more than $60.00 a year difference I'd be more proactive. On paper, since the house is not reported as a security on the credit line I'm so backwards its not even funny. However if the house was reported on the report as a secured asset, which it really is, we would never have these problems.
Its a crappy system, and its more frustrating for those with good credit because they do not keep up with the financial times but there is no regulation so all we can do is fight the system each and everytime.
That all being said, I don't have a problem with the policy either, but I'll be pretty damned pissed if its a cut and dry policy and no one with a clue will look at the situation.
Thankfully I understand how this works, how many people out there do you think went and got these more creative loans and wonder why they are being denied constantly for no good reason? I'll tell you, no one that answers phones seems to be able to understand it, I keep climbing the ladder until I find someone who gets it.
