How Ben Bernanke's refi rejection could help you
The recent revelation by former Federal Reserve Chairman Ben Bernanke about being turned down for a home refinancing loan should serve as a call-to-action to fix onerous lending standards, said Ronald Peltier, CEO of HomeServices of America-an affiliate of Warren Buffett's Berkshire Hathaway (BRK-A) and the nation's second-largest full-service residential brokerage firm.
"We have to bring common sense back," Peltier said on CNBC's " Squawk Box " Tuesday. "The process is too mechanized. It doesn't allow for common sense to enter into the mortgage-qualifying process. The standards are just too high, along with the down payments."
Earlier this month, Bernanke told a housing conference he had tried unsuccessfully to refinance his mortgage.
"How can you understand the wisdom or the logic of a former Fed chairman not being able to qualify for a refinance on a relatively small number given he's in the one percent," said Peltier-urging a return to the lending standards of before the housing bubble, which burst in dramatic fashion between the 2006 home price peak and the 2012 bottom.
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Eight years later, as Bernanke and many other Americans have found out, it's still really hard to get a mortgage-a double-whammy since historically low interest rates are creating a big opportunity for qualified buyers.
Many would-be first-time home buyers can't get approved-forcing them to become renters. But Peltier hopes that'll change. "When the mortgage markets loosen and the credit standards get more normalized, we see that [renters] will move into purchases of homes."
Another optimistic sign, according to the HomeServices CEO, support for the housing recovery has moved from mainly investor-buying for rentals to people who actually intend to live in the homes they purchase.
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"At the start of the recovery two years ago, we were seeing a large percentage of the home purchases being transacted by investors and by private equity. The good news is we are getting a more normalized mix of buyers," Peltier said.
