Lenders Won't Even Grant Ben Bernanke a Mortgage Refinance
Bernanke, the former Federal Reserve chairman until 2013, recently applied for a mortgage loan refinance, and was denied. Bernanke revealed this personal information while at a speaking engagement in Chicago on Oct. 2, according to Bloomberg.
"Just between the two of us, I recently tried to refinance my mortgage and I was unsuccessful in doing so," Bernanke told the moderator at the conference for the National Investment Center for Seniors Housing and Care. After the audience laughed, Bernanke assured them he wasn't making a joke. "I'm not making that up," Bernanke said.
Bernanke believes lending standards are too tight
Ben Bernanke's net worth is estimated between $1.1 million and $2.3 million, and he makes hundreds of thousands of dollars from textbook royalties and speaking fees, reports CNN Money. With this kind of wealth at his fingertips, Bernanke would appear to be a safe bet for lenders. And yet his refinance application was rejected, a sign that lending standards are getting too tight, according to Bernanke.
"I think it's entirely possible [that lenders] may have gone a little bit too far on mortgage credit conditions," Bernanke said, according to Bloomberg.
Tight lending standards have been lenders' response to the relaxed lending that preceded the housing bubble burst and led to millions of home foreclosures. But as recovery continues -- the U.S. currently boasts both a strong dollar and robust growth in the jobs market -- lenders have failed to ease credit standards accordingly.
"The housing area is one area where regulation has not yet got it right," Bernanke said. "I think the tightness of mortgage credit, lending is still probably excessive."
Bernanke's assets tied to retirement accounts, lacking liquidity
Bernanke's home has three bedrooms and two-and-a-half baths, and is located on Capitol Hill in Washington, D.C. According to Zillow, Bernanke bought the home for just under $839,000 in 2004, and is now valued at $965,468.
At the end of 2013, Bernanke disclosed he had a 30-year mortgage with a 4.25% interest rate, which originated in 2011 for $672,000. Bernanke apparently refinanced his mortgage in 2011 and was attempting to do so a second time.
So if Bernanke has enough money to simply pay off his mortgage, why doesn't he just do that?
The first reason is that most of Bernanke's assets are tied up in retirement accounts, reports Bloomberg. Secondly, Bernanke is benefiting from big tax write offs for his mortgage interest, meaning his borrowing costs are low.
This article originally appeared on Gobankingrates.com.
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