The letter from the couple who moved to one of the Redoubt states and was unable to get a mortgage from a local bank reminded me of our experience.
We moved to a Redoubt state in 1993 after having sold our house in Pennsylvania for a tidy profit. We moved to our new location and put that “tidy profit” (which was more than half the down payment for a new place) into a local bank. My husband found work immediately. I was a stay-at-home mom. A few months later, we found a 5-acre piece of property and went back to the same bank that was holding our money and applied for a loan. They refused. The amount of the mortgage we were asking for was laughably small by today’s standards and we were putting more than 50% down. We had impeccable credit. They told my husband that they would not offer a mortgage to someone who was self-employed. We ended up buying our 5 acres through owner financing. When we built our house a few years later, one of the big banks gave us a construction loan and a mortgage, but my father-in-law had to co-sign for it.
A few years later we became friends with a couple who had just moved to our area from Maryland. The husband was an engineer and had just been hired by a local technology firm (a firm which was notorious for serially hiring and then laying off employees). They had not yet sold their home in Maryland. They rented for a few months and then found a nice upscale home to buy. This same local bank couldn’t move fast enough to give them a mortgage to buy their new house (they were still paying on their house in Maryland) simply because the guy was not self-employed. Interestingly, only about three months after they closed on their home, he was laid off and they ultimately had to move to another area.
We are still here. My husband is still self-employed. The local banks did try to follow some of the practices of the big banks and some went out of business as a result. They are now back to being as gun-shy as they were 20 years ago when we moved here. It seems to be a feature of the Redoubt’s tendency toward boom-and-bust economies.
Thanks for a great blog. – Janet S.
Mr. Rawles,
Many times you can get a loan at a local Credit Union faster than you can at a bank. Why give the “Too Big To Fail” banks your hard earned money? They already stole your money with fees, interest, and TARP.
Sincerely, – Joe in Spokane