Even Ben Bernanke Can't Refinance His Own Mortgage
For millions of home-owning Americans, refinancing their home mortgages is a way to try to reduce interest and monthly payments, but doing so requires getting approval from a lender who will comb through your income history, credit scores, and every other financial detail of your life making refis difficult for many Americans to attain.
It turns out that one of these Americans having a hard time meeting the high bar required for refinancing is none other than former Federal Reserve Chairman Ben Bernanke. Here's what he had to say about his own experience, speaking at a conference in Chicago: “Just between the two of us,” he told moderator Mark Zandi of Moody’s Analytics Inc., “I recently tried to refinance my mortgage and I was unsuccessful in doing so. The housing area is one area where regulation has not yet got it right. I think the tightness of mortgage credit, lending is still probably excessive.”
The New York Times's Neil Irwin explains how someone like Bernanke could get turned down: in a word, automation. “The problem probably boils down to this: Anybody who knows how the world works may know that Ben Bernanke has vast earning potential, and that he is as safe a credit risk as one could imagine. But he just changed jobs a few months ago. And in the thoroughly automated world of mortgage finance, having recently changed jobs makes you a steeper credit risk.”
So, if Bernanke got screwed, you can imagine how it is for ordinary Americans in today's notoriously volatile American labor market – the typical American stays in a job for 4.6 years, and people are changing and losing jobs with more frequency these days. If a former chairman of the most important economic institution in the world is seen as too risky, who isn't?