We should have learned by now that we can't rely on Wall Street, financial institutions or banks for the health of our economic future.



In light of that, you shouldn't be surprised to hear me say that affording a mortgage has nothing to do with loan approval.

Then again if you were to eavesdrop on applicants receiving news of mortgage loan approval, you might not help but be a little surprised.

"How much did you say I can borrow? I had no clue I could afford THAT much. Wow, this mortgage stuff is easy."

It makes me gulp to think of the look of wonderment in the eyes of mortgage applicants as I observed their reactions to loan approval news. Please pay attention to what I am going to say.

The bank has NO idea how much mortgage you can afford.

Qualification is the focal point of home loan lending, not how much mortgage a perspective borrower can afford. A bank's main concern is to guarantee you will pay back your mortgage in a timely manner.

Rightfully so, they owe this to their investors. And to carry out this responsibility, they issue mortgage approvals based on predetermined criteria.

Allow me to rephrase. The bank uses underwriting guidelines to determine if you can pay back their investors' money. But you have expenses that would not factor into the bank's decision. For example, how the extended health care of an aging parent will impact your mortgage affordability is your responsibility to determine, not the bank's.

I'd even dare to say it is common sense.

But the tendency in the financial world has always been to follow the herd. We've heard the crowds. The economy is strong! No fear of unemployment!

And the worst mantra of all, real estate values are never coming down!

Just the opposite is today's gloom and doom. Extreme optimism has turned into extreme pessimism.

Do you remember your history lesson regarding the build up to The Great Depression? It was the 1920's and optimism reigned. Financial markets flourished. The Flappers of the Roaring 20's responded by wearing shorter skirts. America was feeling good.

Looking back to the 1990's a similar build up was repeating in America. Let's never forget it was Fannie Mae, advertising on TV, "Mortgage loan approval and purchasing a home can be THAT easy." The financial markets were raising their skirts.

Where have all the mortgage Flappers gone with their extreme optimism and short skirts? They are running around pointing the finger at Joe The Homeowner. Recently they've been assigning the blame to each other too.

Joe The Homeowner is at a crossroad. He can choose to dwell on the past error of raising skirt hems sky high. But I say, Joe don't allow the fear that accompanies current doom and gloom to dominate your thoughts and chart your future actions.

In fact, I have a proposal for you. Buy straw hats.

Let me tell you a little bit about straw hats. J. Paul Getty, founder of Getty Oil Company was one of America's wealthiest citizens. During The Great Depression, when the financial Flappers left behind their mini skirts and resorted to longer hems lines, J. Paul Getty continued to invest.

"I buy straw hats in the Fall," J. Paul Getty explained.

Joe The Homeowner, Fall is here. Don't buy into the doom and gloom. Stop charting your actions with the pervading pessimism. Depend on yourself and take responsibility for affording your mortgage.

It is within your power to prevent another mortgage debacle. Joe The Homeowner, buy straw hats in the Fall.