Your Questions About Home Loans For Federal Employees

Is it time to put the ‘Keating Five’ B.S. to bed for good?

Keating Five was a DEMOCRAT scandal that has now somehow morphed into a smear against McCain:
It all started in March 1987. Charles H Keating Jr., the flamboyant developer and anti-porn crusader, needed help. The government was poised to seize Lincoln Savings and Loan, a freewheeling subsidiary of Keating’s American Continental Corp.

As federal auditors examined Lincoln, Keating was not content to wait and hope for the best. He had spread a lot of money around Washington, and it was time to call in his chits.

One of his first stops was Sen. Dennis DeConcini, D-Ariz.

The state’s senior senator was one of Keating’s most loyal friends in Congress, and for good reason. Keating had given thousands of dollars to DeConcini’s campaigns. At one point, DeConcini even pushed Keating for ambassador to the Bahamas, where Keating owned a luxurious vacation home.

Now Keating had a job for DeConcini. He wanted him to organize a meeting with regulators to deliver a message: Get off Lincoln’s back. Eventually, DeConcini would set up a meeting with five senators and the regulators. One of them was McCain.

McCain already knew Keating well. His ties to the home builder dated to 1981, when the two men met at a Navy League dinner where McCain spoke.

After the speech, Keating walked up to McCain and told him that he, too, was a Navy flier and that he greatly respected McCain’s war record. He met McCain’s wife and family. The two men became friends.

Charlie Keating always took care of his friends, especially those in politics. McCain was no exception.

In 1982, during McCain’s first run for the House, Keating held a fund-raiser for him, collecting more than $11,000 from 40 employees of American Continental Corp. McCain would spend more than $550,000 to win the primary and the general election.

In 1983, as McCain contemplated his House re-election, Keating hosted a $1,000-a-plate dinner for him, even though McCain had no serious competition. When McCain pushed for the Senate in 1986, Keating was there with more than $50,000.

By 1987, McCain had received about $112,000 in political contributions from Keating and his associates.

McCain also had carried a little water for Keating in Washington. While in the House, McCain, along with a majority of representatives, co-sponsored a resolution to delay new regulations designed to curb risky investments by thrifts such as Lincoln.

Reluctant participant
Despite his history with Keating, McCain was hesitant about intervening. At that point, he had been in the Senate only three months. DeConcini wanted McCain to fly to San Francisco with him and talk to the regulators. McCain refused.

Keating would not be dissuaded.

On March 24 at 9:30 a.m., Keating went to DeConcini’s office and asked him if the meeting with the regulators was on. DeConcini told Keating that McCain was nervous.

“McCain’s a wimp,” Keating replied, according to the book Trust Me, by Michael Binstein and Charles Bowden. “We’ll go talk to him.”

Keating had other business on Capitol Hill and did not reach McCain’s office until 1:30. A DeConcini staffer already had told McCain about the “wimp” insult.

When he arrived, Keating presented McCain with a laundry list of demands for the regulators.

McCain told Keating that he would attend the meeting and find out whether Keating was getting treated fairly but that was all.

The first meeting, on April 2, 1987, in DeConcini’s office, included Ed Gray, chairman of the Federal Home Loan Bank Board, as well as four senators: DeConcini, McCain, Alan Cranston, D-Calif., and John Glenn, D-Ohio.

(Years later, McCain recalled that DeConcini started the meeting with a reference to “our friend at Lincoln.” McCain characterized it as “an unfortunate choice of words, which Gray would remember and repeat publicly many times.”)

For Keating, the meeting was a bust. Gray told the senators that as head of the loan board, he worried about the big picture. He didn’t have any specific information about Lincoln. Bank regulators in San Francisco would be versed in that, not him. Gray offered to set up a meeting between the senators and the San Francisco regulators.

The second meeting was April 9. The same four senators attended, along with Sen. Don Riegle, D-Mich. Also at the meeting were William Black, then deputy director of the Federal Savings and Loan Insurance Corp., James Cirona, president of the Federal Home Loan Bank of San Francisco, and Michael Patriarca, director of agency functions at the FSLIC.

In an interview with The Republic, Black said the meeting was a show of force by Keating, who wanted the senators to pressure the regulators into dropping their case against Lincoln. The thrift was in trouble for violating “direct investment” rules, which prohibited S&Ls from taking large ownership positions in various ventures.

“The Senate is a really small club, like the cliche goes,” Black said. “And you really did have one-twentieth of the Senate in one room, called by one guy, who was the biggest crook in the S&L debacle.”

Black said the senators could have accomplished their goal “if they had simply had us show up and see this incredible room and said, ‘Hi. Charles Keating asked us to meet with you. ‘Bye.’”

McCain previously had refused DeConcini’s request to meet with the Lincoln auditors themselves. In Worth the Fighting For, McCain wrote that he remained “a little troubled” at the prospect, “but since the chairman of the bank board didn’t seem to have a problem with the idea, maybe a discussion with the regulators wouldn’t be as problematic as I had earlier thought.”

McCain concedes that he failed to sense that Gray and the thrift examiners felt threatened by the senators’ meddling

What are our chances of being able to be approved for a home loan?

Me and my husband are trying to stop worrying and wanted to see what different people think about our situation on being able to obtain a home loan. We are doing an FHA loan and are using our own funds and gift funds for the down payment, and seller is paying closing costs. We have three red flags that I am aware of which are job stability, overdrafts on bank statement, and lack of savings history. Those are the only 3 that will probably come up during underwriting. The overdrafts can be explained as a charge came through a day earlier than was expected. The lack of savings are because we are in our lower 20′s, and have only showed about $1000 worth of savings throughout our bank statements. The job stability comes from me being a term employee in the federal govt to10/2013, but I have been in the same field for 4 years. Husband has been in his current job for 4 months after being unemployed for 6 months strait. Our debt/income ratio after buying the house is about 30% which is good. So based on these details, what do you think are our chances of being approved?