Link to article: $8 million in assets and can't get a mortgage
Weimin's comments on the article:
Banks are super strict with really large mortgages of high net worth individuals because they can't predict these loans since these are outliers in the credit models. No point taking the risk because these are not regular customers anyway.
Also, rich people w $8m net worth don't care about their credit score, do they? What would they need a stellar score for? They have the non-cookie-cutter ways of getting financing. They are sophisticated and would walk away when it no longer makes sense to make mthly payments. Unlike regular people who feel 'obligated.'. Hence banks are right to have stricter criteria.
FHA is a recipe for disaster. They require 3.5pct down for low credit people! Downpayment is the main determinant of loan quality/foreclosure. FHA is also technically insolvent. Should just be closed down.
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