High-risk home buyer proves `too-tough' lenders wrong

     By Robert J. Bruss
     Tribune Media Services
      DEAR BOB: About six years ago, I made a purchase offer on a house that the sellers accepted. I applied for a mortgage with four different lenders, and all rejected me for insufficient income and because I had been late on my car payments.
      The car was a lemon and an arbitrator finally made the dealer take the bad car back, but my credit was ruined.
      The nice home sellers finally agreed to carry my mortgage at 9 percent interest. I faithfully made the payments on time to them every month. Recently, I refinanced at 7 percent interest.
      My point is, the mortgage lenders are too tough. You constantly run letters from home buyers who have trouble getting a mortgage. Why won't the lenders look at the applicant instead of just numbers? When I bought my house six years ago, my mortgage payment took 42 percent of my gross monthly income. Why are lenders so unreasonable? -- Marco H.
      DEAR MARCO: Congratulations. Those four loan rejections would have discouraged most home buyers. But with the seller's help, you found a way to buy your own home.
      You're right. Mortgage lenders are too tough. The new FICO (Fair, Isaac Co.) arbitrary credit scoring system now used by Fannie Mae, Freddie Mac and most mortgage lenders unfairly disqualifies many ambitious prospective home buyers like you.
      Although you were a very high risk home buyer, whose mortgage payment took 42 percent of his income (33 percent is the maximum for most lenders), you proved the lenders wrong.
      Many borrowers in your situation would have walked away if making the monthly payments became too difficult.
      Unfortunately, most lenders forget it's the residence that is the loan security, not just the borrower.
      If the borrower defaults, the lender forecloses and gets repaid by selling the property. But most lenders never want to foreclose, so they allow only the most-qualified borrowers to obtain a home mortgage.
      -- Send your questions to Robert J. Bruss, Tribune Media Services, 435 N. Michigan Ave., Suite 1400, Chicago, Ill. 60611.