I have been glued to the television watching two days of testimony from Fed Chairman Ben Bernanke to the House and Senate. Maybe I’m a mortgage nerd, I find this amazing.
I’m convinced a majority of our elected officials are there just to grandstand and don’t have a clue about their personal mortgages! Many of our representatives are treating Mr. Bernanke as if he personally doled out inappropriate subprime mortgages in an abusive fashion. Other random tid-bits that I found interesting from the Q&A sessions are:
- Bernanke mentions the "wealth effect" that home ownership provides Americans.
- The lower third of Americans have less than $500 in savings. It is crucial to have at least 3 months of gross income in savings in the event of an illness, unemployment, etc.
- Bernanke stated that home owners with ARMs (adjustable rate mortgages) should call their lenders well in advance prior to their rate/payment adjusting. I recommend calling at least six months prior to a scheduled rate increase to have your credit reviewed in the event corrections or repairs need to make sure you’re in the best position to refinance.
- Suitability was defined by Bernanke as being more about affordability and the ability to repay a mortgage and less about selecting the right program out of the dozens or so available for a borrower.
- Many borrowers took out mortgages without understanding the terms.
I watched as much of the two day testimony as possible…ah, I’m glad I’m not Ben!
To read his prepared testiomony, click here.