While this might sound a little hard to believe, it has been reported that former Federal Reserve chairman Ben Bernanke was unable to refinance his mortgage. Yup, he got straight up denied.
You might be thinking, yeah right, why would a lender deny such a high profile individual who you’d think would be good for the money?
After all, he did direct the monetary policy for the entire United States, so the prospects of him paying the mortgage on time are pretty darn high.
But it’s true! He apparently shared the unfortunate news with Moody’s economist Mark Zandi at the National Investment Center for Seniors Housing & Care Conference in Chicago.
When speaking of his attempt to refinance the mortgage, Bernanke said he was “unsuccessful in doing so,” at which point the audience burst into laughter.
No Laughing Matter, Seriously
The crowd was probably pretty surprised when Bernanke followed with, “I’m not making that up.”
He then went on to add that lenders may have gotten a little too conservative with their mortgage underwriting as of late, and that the tightening had become “excessive.”
Additionally, he noted that regulators, presumably the CFPB, haven’t seemed to get the housing market right.
So I got thinking why Bernanke would be denied a refinance, and then a light bulb went off in my head.
He just resigned from his job as chairman of the Federal Reserve after two successive terms spanning eight years.
Perhaps lenders are well aware of this and not interested in extending a loan to someone who is either retired or short on income.
Sure, he might have plenty of money in the bank, but if the bank can’t determine his ability to repay the loan, he might have to go with a non-QM loan instead.
And Bernanke probably thinks that’s preposterous, seeing that he’s the former Fed Reserve chairman.
It Seems a Little Fishy…
While it does sound really silly, he might have a point about the new mortgage rules, and their unintended consequences.
At the same time, I can’t see why a large bank wouldn’t offer Bernanke amazing terms on a mortgage and simply keep it on their books. He’s not much of a credit risk, so there’s no reason to sell the loan on the secondary market.
Maybe it’s just a stunt orchestrated by Ben to get regulators to take another look at the harsh new guidelines now in place. Or somebody at the bank made a huge mistake…
By the way, he’s currently a Distinguished Fellow in Residence at The Brookings Institution, which may or may not be an adequate job title as far as an underwriter is concerned. Hmm.
It’s unclear what he was up to this time around, but I doubt he was attempting to get the interest rate on his 30-year mortgage any lower.
Who knows? Either way, I’m sure someone will offer him a pretty sweet refinance sooner rather than later.
(photo: Medill DC)