Banks Reject Mortgage Loan Because House is Round

We found our dream house.

We found it just 15 miles outside the District, in southern Prince George’s County. A stunning three-bedroom, two-bath contemporary on six acres of wooded land with a stream running through it, a huge deck and a swimming pool. A wall of windows brings the surrounding woods into the house. Strongly built and energy-efficient, it sailed through inspection. It was perfect for us, a commuting couple with jobs in New York and Washington. And the price? Less than a Manhattan studio.

But our efforts to buy the house revealed a dimension of the housing market many people probably don’t see. Much of the recent news about the housing market has concerned massive foreclosures. But banks are scrutinizing much more than would-be buyers’ financial shape. They’re worried about other shapes, too.

We were pre-qualified for a loan; with two professional incomes, good credit and enough cash for a 20 percent down payment, that would not be our problem. Yet two mortgage companies turned us down. The first did so after its investors – big banks with household names – rejected our application. The second mortgage company’s internal underwriters also rejected us. Their reasons were the same: The home, a customized modular house of internationally acclaimed design, built in 1989, is . . . round.

Being “unusual” or “unique,” it was deemed “not marketable.” Despite its evident worth and multiple independent appraisals, the lenders said they could not assign a value to the house because there were no comparable properties. And, with no “value,” there was insufficient collateral for a loan.

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