I want a new house.My lender says new guidelines have banks approving my loan based on loan to value (LTV) maximums. But the LTV maximum keeps changing depending on what county the house is in ...
But Damn! Isn't that redlining?
This is a very sensitive mortgage topic. But you can always count on me to "open up a can of worms" and stress my opinion. I received a disturbing email on Friday informing me that a few 'major banks' are rolling out new home loan guidelines to protect their ASSets ... Or are they?
I saw the new guidelines in black and white. Many areas in the United States, like California New York, and Florida have been experiencing a higher level of foreclosures and notices of default. As a result, these 'major banks' are now rolling out new home loan guidelines, which give "risk assessments" to specific counties that are showing signs of 'distress'. Yes, I'm referring to counties that have higher default levels, foreclosures and are currently lowering property values. Whatever category the county falls into now determines the maximum loan to value that the banks are currently willing to write loans on.
To that, I throw this spin on your question. Is this not Redlining?
Well to quote another famous land owner (Bugs Bunny circa 1967) "MMMM ... could be, could be!!"
Back in the heyday, banks wouldn't lend money in areas that were populated by minorities. And now, it's coming back around in full scale!
Why? Well, most of the counties in California for example that were on the list had weaker job economies, which indirectly points to less educated individuals with lower income levels. It's not picking the color of a person's skin, but it is certainly picking out a demographic group!
What do you think? Leave us a comment below.