A bit of a personal post today, but I can't help myself.
If anyone wants to see why it is taking this economy so long to recover from the financial meltdown, here's my suggestion -- refinance your home, and then think a bit about what this one process says about the efficiency of information management and the legal and regulatory obstacles we have created around things that should be simple. And think about how utterly disconnected the people in the big white house and the pretty white dome about 25 miles from here (of both parties) are from the reality of what actually creates economic value.
Here are the details.
- We have been in our home -- our only home -- for 16 years.
- The value of the home is roughly 2X what we paid for it, even after the past few years. We've been fortunate, and I know that.
- We have about 10 months left on the mortgage -- yahoo! (the exclamation, not the company).
- The original note on the home was with Countrywide; the note was bought by another company that shall remain nameless about 10 years ago.
- We have near perfect credit and no debt. Knock wood.
I don't say this to brag -- we've been lucky as well as frugal -- but as context to what follows.
- We decided that we would like to take a small amount of money out of the house (about 8% of the property's value) to reinvest in some capital improvements (as I said, the house is 16 years old).
- We decided the best way to do this was to refinance the small amount remaining from the original note plus the additional capital funds, for a total new loan equal to about 12% of the value of the house.
- And we decided to do this, for simplicity's sake, with the same aforementioned company that we have been faithfully and on time making payments to for over a decade, and who likely ought to have some remote idea of the property details and information that set the context for the original transaction.
First came the ceremonial parade of documents. Our past two W-2s. The two most recent pay stubs. A copy of our homeowner association docs. A copy of our homeowners policy. A copy of the original survey for the property. A release form to get our past two tax returns from the IRS. Contact information for AIIM to verify my employment (Felicia, please verify when they call).
Then, an actual in-person appraisal. A lady came to our house and measured it (hmmm, now why not just look at those original documents?), and went room by room taking measurements and pictures. I imagine all of this useless and redundant information will wind up as electrons in some inaccessible content silo somewhere for when we ultimately sell the house. I am hoping the pics will not wind up on Facebook because I didn't realize the lady would take pictures and I didn't have time to clean up.
Again, at the risk of repeating myself, this is to review the credit worthiness for someone who has been in the same job for 16 years and lived in the same house for the same period. Who has been a customer of the people issuing the new loan for a decade. Who has good credit. Who was looking for a refinance equal to only about 12% of the value of the property.
How did things get so messed up relative to information management in the financial services industry and the legal and regulatory framework surrounding simple financial processes that the loan officer at the bank couldn't approve this in 5 minutes? My guess is that all of this complexity is a well intentioned effort to curb the "abuses" of the past. But the net result of all this incredible inefficiency is a huge drag upon our collective productivity and future growth.
The loan officer had my credit report. There must be something about all the details of my property buried in the bank's information silos. After all, they've been a partial owner with me of this very same property for 16 years. Relative to the current value of the property, how about somebody just runs a Zillow and/or looks at the recent sales in the area? How about based on all the accumulated information about me and my property that is pretty accessible a knowledge worker makes an informed judgment on the spot that a loan for 12% of a property's value to a long-term customer does not require a parade of documents to choke a horse? How about we do something productive with all this wasted effort?
Case management. Case management. Case management.
OK, I've vented.
Recent Comments