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April 5, 2012

Government Making Housing Recovery More Difficult: A Personal Story

I read a troubling article today in which a realtor described how selling homes in the newly regulated market have been extremely difficult and it brought back some memories.

While the article did not point out specific examples as to how regulation is affecting the markets, my housing purchase experience sure did point them out. Back in June, I agreed to purchase a home and went to seek financing with Chase Bank in the town that I worked. I wanted an FHA loan because the down payment was affordable.

My first mistake was choosing an FHA mortgage, my second mistake was choosing Chase Bank.

I gave the sellers until August 31st to close, and since it was the end of my apartment lease, I figured it would be a good time to transition. On September 30th, I marked Day 30 as effectively being homeless. I could not get a provisional extension to my lease since I had given the required 45 day notice and my apartment had already been leased to someone else. The reason for the delay was because my home was to share a well with the new home next door.

FHA, under its regulations, required that since the well pump was going to two houses, that it be placed on a separate, exclusive electricity meter. The amount of electricity coming out of the well amounts to between 80 cents and $1.10 per month (total). However, we had to pay $4,000 to have this meter put in and we currently pay a $27.00 per month required meter fee.

To make matters more complicated, the loan officer with Chase Bank was rude, dishonest, and on a few occasions, lost information. On September 26th, I wrote a letter to Chase Corporate detailing a list of grievances against the organization. I even had an email from my loan officer in June stating "the massive amounts of paperwork required for month's end take precedent here (over your mortgage)," which I attached to the letter.

On September 30th, I got a call from the corporate headquarters. Their investigation found several errors in record retention and the underwriting of the loan. Had it not been for the hard work on my realtor, the seller's realtor, and my involvement with Chase Corporate, I would not have closed and moved into my home on October 7th.

FHA mortgages now account for 95% of all new mortgages in the United States. With that as the case, if anyone has half the pain I've had, I could see the rationale of a long-term lag in housing.

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