With all the recent talk from Congress and the President about housing reform, along with the upcoming implementation dates for CFPB regulations, it seems that the federal government has found a renewed interest in mortgage lending. I wonder what would happen if the United States of America came to your Credit Union and needed a mortgage loan.
So the obvious piece of collateral is the White House. It’s one of the few, if not only, government buildings that really is a house. And you could probably argue it is the President’s primary residence.
The first challenge in obtaining a home loan with the White House as collateral would be related to the appraisal. Where would you find comparables? How many houses do you know that have over 55,000 square feet and sit on 18 plus acres? Let alone how many have sold in an arm’s length transaction within the past twelve months and within a five mile radius. Good luck with that.
Now even if you can get past the notion that the appraisal is going to be an issue (maybe you can get a property inspection waiver), I’m not sure that the credit rating of the federal government would meet a 620 minimum credit score. USA’s score would certainly be tarnished by all of the new inquiries and new debt, as well as the amount of debt. And their utilization factor has to be high. And what about available credit, it might not be much.
Verification of deposits would be akin to mattress money as the federal government keeps their money in the Federal Reserve. How you would apply cash on hand rules to someone with a money printing press?
But let’s suppose we can get a letter of credit explanation from the US Treasury as well as a verification of income from the Internal Revenue Service. Now it’s time to calculate the debt ratio. I’m not going to try and do the actual math, but I gotta believe it’s gonna be above 43%. You know what that means. It’s not a qualified mortgage. And after January 1st, neither of our friends at Fannie or Freddie would buy the loan since FHFA has directed them to only purchase qualified mortgages. Maybe we can call up Raj Date, former Deputy Director of the CFPB and architect of the Ability to Pay rules, and see if his new company, Fenway Summers, will purchase the loan.
I’m sure there are more challenges that would be involved. Challenges similar to the ones Credit Unions face every day in trying to be memberlicious and help their good, hard working Americans obtain the American Dream. Too bad DC does not realize that all their new rules and laws are going to prevent Credit Unions from doing just that.