The Regulated States of America – A True Story

George Washington Taxpayer owns 10 acres of land, four miles from the South Carolina coast, just a driver or two from the renowned Kiawah Golf Resort. Recent assessments (even in this dismal housing market) are solid seven figures, and the 25% or so of value mortgage has been overpaid every month for around ten years.

George and Martha have a totally clean credit rating, more than enough visible reported income, plenty of liquid, unencumbered assets, and a second building on their property that is used as an office for their very own, very private, very small business corporation.

The business has been “in the family” for more than thirty years, directly and indirectly employs about twenty other individuals and small businesses, and produces substantial, taxable income. It also pays rent and salaries to the Taxpayers.

George called Notquitesoquick Mortgage, LLC to re-finance his still barely “jumbo” loan — thinking, with a solid credit score, pretty impressive total documented income from all sources, a history of over paying, what could possibly go wrong?

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Franklie Impressed listened with interest as George explained both his finances and objectives — Notquiteso Quick stood to make thousands in fees and her commission would be substantial. She just couldn’t wait for this “no brainer” to be consummated — finally, a qualified borrower.

Franklie would be able to reduce citizen George’s mortgage payment by nearly 26% which she knew he would put back into the economy to the benefit of all the more potential homebuyers. She, in turn could think of two or three purchases she would be making over the weekend in anticipation of a bigger payday.

She hurried off to process the information George had provided…

George could not believe his ears as Franklie sobbed about the underwriter’s decision. His situation didn’t fit the regulatory guidelines because he ran a business from a building that he owned on his own property. Since he collected rent from (his) corporation that occupied the building, the property became ineligible for a mortgage from Notquitesoquick or, apparently, anyone else.

In frustration, George tried some logic — Franklie interrupted. That’s right Mr. Washington, as plainly stupid as it sounds, the regulations are clear. We cannot allow you to reduce your payments on this mortgage which you clearly have had no difficulty over paying regularly for the past ten years.

Our hands are tied, but if you lose your business and become less qualified in the future, please come back to speak with us — we’d just love to turn you down for some other ridiculous reason.

Sadly, this is too true a story. If you agree that we will eventually regulate ourselves into economic oblivion, please send me your stories for publication in a similar manner. Additionally, isn’t time that we all actually did something proactive to alter this scary trend?

Steve Selengut

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