Extreme mortgage makeover

About eight years ago, we were trying to buy our first house in Suffolk. The market had pulled down the attic stairs on its way through the roof. But that was OK, because mortgage brokers were leaving huge baskets of cash at our doorstep every night.

Investors were so eager to buy mortgages that it didn't matter how unreliable a borrower was, or if said borrower was actually human. Prices were being forced upward by an unaccountable optimism that they would never again fall and that untold wealth was just one flip away.

Had we been reckless at the time, we could've borrowed literally three times what we could afford to repay. We were encouraged to do so every time the bank answered the phone: "This is HometownBank. Press 1 to borrow $300,000."

Despite that, we eventually settled on a modest three-bedroom, one-bath farmhouse (we got a deal because it was my cousin's), with a mortgage we could afford.

We showed up at the office of our attorney, a bud who talks every bit as much as I do. Despite plenty of catching up, we had the paperwork done in half an hour. Three weeks after Hurricane Isabel came through, the house was ours, along with its four acres, apple trees, grape arbors and several brazillion deer ticks.

Last year, we sold it. We expected current conditions would make it easy to find and buy a new place.

Right.

When we finally bought a house last week, it represented the end of 10 months of an entirely different kind of ridiculous. If the experience were confined to me, I might chalk it up to bad luck or to some failing in my financial brain.

But it isn't. Talk to any real estate agent or attorney, and they'll tell you: Buying a house is too hard. That should worry everybody hoping there's an impending end to the nation's real estate troubles.

I'm not talking about house values. They are what they are. The fact that we bought our house for lots under its assessment should send shivers through City Hall, but it takes time to find a new normal in this market. And I'm not talking about the mechanics of the deal. Since we weren't buying a foreclosure, the details were settled painlessly and quickly.

The problem was borrowing the money. (I should admit that our credit suffers a bit because we tend to carry too little debt. But otherwise, we're pretty creditworthy and reasonably upstanding. The guy shepherding our deal is also one of the best in the business, working for an honest-to-goodness bank.)

Satisfying the mortgage requirements was like trying to juggle possums but less fun and more likely to result in injury. This time around, we qualify for what we were actually trying to borrow. We had a good down payment. Thanks to falling interest rates, our monthly payments are about what they were in the old house.

But all that's not enough. Not only do borrowers have to provide all kinds of ID and proof of their income right that minute, not only do they have to sign a tree's worth of documents and disclosures, not only does the house have to hit an appraisal based on 16th century runes, borrowers now have to sit through a warning that the FBI is coming to get them.

There is, in the goat-choking stack of paperwork generated by buying a house, now a page that promises you a trip to Gitmo if you lie. If you needed a more definite sign of the changing times, that's it.

Gone are the days when any schmoe with a decent patter could borrow whatever he wanted to buy whatever house he wanted. Gone, too, are the days that decent credit and some savings could easily buy you a new home.

Nowadays, it's a long slog through a thicket of paperwork, evidence and busywork. Nowadays, the government requires a bank to assume you're a crook.

These new rules were designed to prevent the kind of fraud that crashed the economy. But I can tell you that they're so onerous that they could prevent that same economy from recovering, at least in the housing market.

As we tend to do in America, we have exchanged one kind of extreme for another, the excess of liar loans for DNA samples. I'm joking about that last part, but just a little.

Donald Luzzatto is The Pilot's editorial page editor. Email: donald.luzzatto@pilotonline.com.