Approximately a month ago, I was getting a client approved for a mortgage with mortgage insurance and while going over the details of what we needed to document the deal, the customer deadpanned to me, “Where do I go to get the bloodwork done?” My response, “Nah, we don’t need that —- yet.”
The report below is actually from England but it now appears that the government is going to start requiring mortgage lenders in England to ask questions about how much their borrowers spend on tobacco and alcohol.
Now, if you ask me, I think that tighter restrictions in terms of downpayments, debt to income ratios, credit scores, job histories, cash reserves, etc. all make sense. But whether my neighbor spends more or less on alcohol than I do, I can’t see what substantive difference that makes in our ability to repay our mortgages. (Hint – I’m not the one who spends more on alcohol.)
The pendulum is swinging too far in the other direction in some areas and not far enough in others.
Tom Vanderwell
Homebuyers face questions on alcohol and smoking under new mortgage rules – Times Online
Homebuyers could be forced to provide detailed information about the amount of money they spend on alcohol each month to qualify for a new mortgage under a new clampdown on reckless lending.
In a sweeping review of the mortgage market published today, the Financial Services Authority (FSA) said lenders needed to be far more rigorous about their financial checks of potential borrowers.
It said lenders should delve deeper into homebuyers’ personal spending including the amount they spend on alcohol and tobacco.
Spending on shoes, clothes and childcare could also be assessed under a new, industry-wide “affordability test”.
At present, the FSA does not prescribe rules about assessing a consumers’ ability to repay a mortgage and practices vary from one lender to the next.
Technorati Tags: Mortgages, Alcohol use
