Mortgage troubles do a flip-flop

In a reversal of boom conditions, more can now afford homes but find loans hard to get.

Nearly half of all California households can now afford the median-priced home in the state — but that’s no help if they can’t get mortgages.

Six years after the subprime mortgage meltdown, banks remain tight-fisted, even with solid borrowers — a fact they attribute to shifts in government regulation and demands that they buy back bad loans. Mortgage credit has not eased much since 2007, according to Federal Reserve surveys of loan officers, even while low rates and the housing recovery have borrowers lined up seeking financing.

First-time buyers and the self-employed must jump through especially complex hoops. Even gold-plated applicants must justify the smallest quirks in their finances in excruciating detail. And processing applications can take months.

An unpaid $8 utility bill nearly derailed Sam Dogen’s bid for a refinancing. He had already waited 80 days with increasing frustration when he got an urgent call from his bank officer.

“We can’t go through with this,” he recalled the officer saying. “Your credit score came back at 680.”

Dogen was floored. He’s an investment banker and personal finance blogger who owned three other homes and had savings of nearly $1 million. It turned out that two of the big creditrating firms still scored him at 790, but the third had whacked him over an $8 elec- tric bill that a former tenant had left unpaid two years earlier — a debt he said the utility hadn’t told him about.

Dogen, who operates the Financial Samurai website, said it took a series of angry phone calls and nearly three more weeks to straighten things out with Pacific Gas & Electric and Citibank and finally get the deal done.

All this marks a reversal from 2006, when the California Assn. of Realtors said just 12% of households could af-

were warranted because of rising healthcare costs and continued losses in its individual insurance business. A company spokesman said a $1-billion upgrade to its computer system was “causing us to run up higher administrative costs than we would like. We should see improvements in that over time.”

Steve Shivinsky of Blue Shield added that “we are taking many actions to ad- dress rising medical costs, including collaborations with providers that improve quality while saving money for our customers.”

Gracee Arthur, a longtime Blue Shield policyholder in Malibu, said her monthly premiums were rising about 13% to $691. She said it was unconscionable for the nonprofit insurer to pay its chief executive $4.6 million while raising customers’ rates so much.

The company said “executive compensation has nothing to do with our rates.”

Jones has expressed support for a 2014 ballot initiative that would give the state insurance commissioner the authority to block unreasonable health insurance rate increases.

Without that power, he said, premiums will keep climbing despite other changes under the federal healthcare law next year.

“It’s the big omission in the Affordable Care Act,” Jones said. “I believe the rates will go up and go up dramatically” in 2014.

Opponents of the ballot measure, including health insurers, doctors, hospitals and business groups, say it would create a costly new bureaucracy and will not address the underlying reasons for rising premiums.

chad.terhune@latimes.com