No Mortgage for Freelancers?

Your local NPR or public radio station  “The Take Away” is running talk about how freelancers are treated unreasonably (I’d say prejudicially) for mortgage loan applications vs. job holders. Got an offer letter or a couple of pay stubs from a job? You’re on the fast track for refinance or a new mortgage. Freelancer? They want two years of tax return documentation indicating a high net. And freelancers are highly motivated to reduce net as much as possible, for tax purposes, by showing expenses.

So freelancers are faced with two horns – you either get taxed to death (don’t forget the extra self-employment tax) or you don’t get to own a home. The current society is structured to reward job holders and punish freelancers.

I hate this too. But it’s not going to stop me. Society is always in tension with the individual – I already figure society is not out to help me. I consider it a given, so I’m never suprised by injustice, shortsightedness, or the general bias if not downright persecution of the individualist. Sure, if you’re a large corp, you get a lot of breaks. As a sole proprietor or small LLC, they’re going to stick it in you as often and as far as they can. I take it for granted.

But if you didn’t catch our recent article on home ownership (and other fallacies) – Mount Olympus is Dead – you might want to, if this concerns you personally. I’m not so sure I *want* to be handed anything. I’m not so sure that what a lot of people call home “ownership” isn’t just a fairytale we tell ourselves while sleeping in homes that are 90% bank-owned, if they’re average. The notion that homeownership is the prize of success is still, in my book, a load of crumbcake. Especially if we live there by having our heads so far up our corporate boss’s butt that the job feels extra-secure. We’ve learned a lot about both homes and jobs lately.

That aside, effectively preventing a lot of self-employed from having home loans is a raw freaking deal. It’s retarded. It’s stupid. It’s shortsighted. And… <drumroll>… the good news is that it’s going to change. Don’t believe me? I’ll be here for the next few years, so I’ll be prepared to eat my words if I’m wrong. But I don’t think I’ll have to do that. It’s going to change, because structurally, the way in which work is conducted is going to change. Is already changing. I won’t beat that drum all over again here – we’ve said it in lots of other articles. But one line: Companies, if and when they come out of the economic disaster we prefer to call, euphemistically, “recession”, will include those that make the same stupid mistakes again, and those who have already irreversibly adapted to the new order – a more transactional relationship with workers – one that is contract-based, temporary (most jobs are destined to “become” temporary – they always were – we just pretended they were “permanent”), and one that requires individuals to take increased responsibility for negotiation and for securing needed benefits.

And, kids and kiddoes, the mortgage lending industry will respond to the changes. Perhaps slowly. Perhaps belatedly. Perhaps stubbornly (major finance companies have had their heads up their own arses over refinancing troubled mortgages and have elected to take losses rather than question their own morality and superiority – shooting themselves in the foot and homeowners in the head – we will remember this about them – we will remember it a long time). But they will, ultimately, respond – because it’s not up to them. The sheer pressure of the massive growth in more transactional workers along with the surplus of homes and overextended building will mean that if anyone does not yield, someone will simply start or create a business out of catering to the facts – financial elitism be damned.

In the short term, it may be a darned inconvenience. But so what? It’s part of the deal. It will be, regardless of whether you and I like it. And in the end, the world will have changed. I’m ready for some of that. The day we see the self-righteous lenders who denied refinancing to all those souls who could pay a reasonable rate, and kicked them out into the street, so the lender could take a stupid loss on the home because “they’re wrong – they’re bad – we shouldn’t have to refinance them – they shouldn’t be rewarded for not sticking to the deal we made with them” (yeah, those guys have publicly said all of that) – the day we see them hat in hand offering loans to woo them back, or their children back, without the traditional securities that didn’t mean a tinker’s damn anyway (their job and their car), some of us will be laughing. And we’ll know that, with the same negotiating power that those folks will have with income sources as the transactionally employed – contractors, freelancers, entrepreneurs – they’re better off and more in control of their live.

There are foolish people who will make foolish deals. There are predators who will prey on weaker understandings. That will go on, too. But it’s not going to be the whole story. I’m interested to hear how “The Take Away” topic plays out. But one thing I’m even more interested in – how it plays out in the culture of work.