http://www.huffingtonpost.com/charles-h-green/and-you-thought-the-purpo_b_414974.htmlI'm no economist or banker, so I occasionally labor under the delusion that banks are supposed to lend money to credit-worthy people. Of course, they diluted the definition of "credit-worthy" a few years back. That ruined their liquidity. Then the Feds stepped in with the Troubled Asset Relief Program.
Silly me, I had also thought TARP was partly aimed at restoring banks' ability to lend money again.
Read the following (real) tale of woe from a qualified would-be borrower--let's call her Jane--and ask yourself why Wells Fargo would be so hesitant to lend.
For a clue, look to the end of Jane's tale.
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Jane's Tale: If I Can't Get a Mortgage, Who Can?
Last spring my sister and I decided to build an addition onto our vacation home in Northern Minnesota. Given today's economic climate, we knew it wouldn't be a cakewalk but we had no idea what a nightmare lay ahead.
Our family has owned lakefront property on Lake Superior since 1971. It's prime vacation area with large million-dollar+ homes built on either side. Our parents deeded us the property 20 years ago, mortgage already paid off. After our mother died last year, we decided to build an addition. We hired an architect and a contractor with a long and credible reputation and a crew ready for work.
We looked for a bank that would provide a construction loan for $250,000, for conversion to a mortgage when construction was completed. We went with Wells Fargo in Duluth. Their banker told us a loan was possible, but we'd need to open a business account first. My sister deposited $30,000.
More at the link ---