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Old 04-30-2018, 10:04 AM
 
608 posts, read 280,534 times
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Quote:
Originally Posted by 1insider View Post
I can't imagine there is a secondary market for 105% LTV mortgages but, hey, there's a market for bad debt of all sorts so who knows. It could be a lucrative although sleazy business.
IIRC, in the previous, "lost another one to DITECH!," incarnation of those 100% + mortgages, the "extra money" was loaned at credit card interest rates 15% to 30%. Given that vig, perhaps the credit union management sees an upside to the deal.
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Old 04-30-2018, 10:07 AM
 
6,992 posts, read 6,629,325 times
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Main thing is that the GSEs had already lowered the lending standards below that of the previous housing bubble. A 580 credit score will get you 3.5 percent. A lot of the crisis mechanisms are still in place. They just tack on the missed payments to the end of the mortgage in automated forbearance. FHA is insuring loans to delinquent borrowers.
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Old 04-30-2018, 11:18 AM
 
Location: Tennessee
20,946 posts, read 15,267,317 times
Reputation: 23722
Quote:
Originally Posted by 1insider View Post
I can't imagine there is a secondary market for 105% LTV mortgages but, hey, there's a market for bad debt of all sorts so who knows. It could be a lucrative although sleazy business.
The interest rate is a point or so higher than a standard conventional loan. They will make it up, but it is ultimately still cheaper than renting a similar unit.
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Old 04-30-2018, 12:18 PM
 
Location: Raleigh
6,964 posts, read 5,183,151 times
Reputation: 9390
Quote:
Originally Posted by TimAZ View Post
I guess nothing, as long as they can fog a mirror.
Quote:
Originally Posted by aslowdodge View Post
This naievete is dangerous. Too many like you don't know what happened. That's what caused the whole crash to start with. Then those low income folks' loans got sold on wall street and were sold as a package of triple a rated investments. Should the whole country crash again to give some low income folks a chance who can't afford it to start with?
There was definitely some of that that caused problems, and I won't discount that.

But this isn't that. Just because there are no income restrictions, doesn't mean you're going to be approved for a $400K house on a $24K income.

And, these are conventional, fixed rate loans, not the garbage loan products that helped spur the bubble and cause the crash.

And, they are required to be owner occupied.

I always thought a lot of the crash was caused not by people living in their own homes, but by people that were getting into the REI game with little skin because money was easy, people taking a loss on rental income because the equity gains were so great, people that flipped homes without actually doing anything, just buying and holding.
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Old 04-30-2018, 01:54 PM
 
2,767 posts, read 1,494,078 times
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Quote:
Originally Posted by aslowdodge View Post
This naievete is dangerous. Too many like you don't know what happened. That's what caused the whole crash to start with. Then those low income folks' loans got sold on wall street and were sold as a package of triple a rated investments. Should the whole country crash again to give some low income folks a chance who can't afford it to start with?
No, YOU are the one who doesn't know what happened.

The low income demographic was not the cause of the crash- that's what Rush Limbaugh told you.
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Old 04-30-2018, 02:01 PM
 
12,405 posts, read 9,195,957 times
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Quote:
Originally Posted by Serious Conversation View Post
The interest rate is a point or so higher than a standard conventional loan. They will make it up, but it is ultimately still cheaper than renting a similar unit.
You do realize this isn't true everywhere, right? Especially with such high LTV's that are almost like putting a down payment on credit cards to buy a house with no money...
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Old 04-30-2018, 02:48 PM
 
8,142 posts, read 5,998,122 times
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Quote:
Originally Posted by aslowdodge View Post
It was not sarcasm.
Some people are just idealistic and pop off with what sounds like a nice idea not understanding the ramifications.

The folks with big hearts who can't do math.



Quote:
Originally Posted by damba View Post
No, YOU are the one who doesn't know what happened.

The low income demographic was not the cause of the crash- that's what Rush Limbaugh told you.
They contributed. Just like the guy who makes $60k a year and put nothing down on a $400k house. Or the guy making $200k a year that bought an $8M mansion. Just like the lenders that approved those loans contributed.

Picking out one thing or one group is silly. Lots and lots of fault to go around.
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Old 04-30-2018, 02:52 PM
 
Location: The Triad (NC)
26,829 posts, read 57,830,396 times
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Quote:
Originally Posted by Serious Conversation View Post
...but it is ultimately still cheaper than renting a similar unit.
Until they need a LUMP OF CASH to do a major and even expected expensive repair
like the HVAC equipment or a new shingle & gutter job. They won't have it.

And because they're already up to their eyeballs they won't qualify for a repair loan.
At that point they're going back to the well. No one else will/can give them that $5 to $10,000.
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Old 04-30-2018, 04:33 PM
 
8,374 posts, read 7,362,552 times
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What people are missing, is that Barney Frank got laws passed to make lenders loan money to poor people as he called them, no matter what.

The last figure, was 22% of loans had to be made to people that could not qualify to buy a home by conventional mortgages. If you did not meet that quota, you could no longer make mortgages available. They came up with all kinds of crazy loans, to meet those quotas. The lenders tried to get the feds to let them tighten up on loans and no longer make crazy loans so the poor people could buy homes. When George Bush became president, he tried to get congress to stop these crazy loans but Barney Frank gave a passionate speech, and that ended any changes.

People in the mortgage business, and Real Estate Salespeople, knew we were headed for the cliff, but laws said that those bad loans had to be made or shut up your business.

When they made those new type loans, they had to make them to everybody, and people that could not qualify for the old standards were buying homes they could not afford.

The loans were often made for 5 years, payments lower than the interest rate, and had to be re-financed after 5 years. Problem was, the poor people and those that were in by the skin of their teeth could not afford the new loans they were to start paying, and the real estate market tanked and people all over the country lost their homes to foreclosure. Prices dropped and people had negative equities, and the big crash just got worse and worse as people walked away when the homes were worth way less than the mortgages.

The real estate bust happened, because of the Federal Government through Congress making laws that required lending to people that should not have been able to buy homes, and this brought on the real estate fiasco we went through.

Today they are not making those crazy loans, so the real estate market is many times safer than it was back in those days.
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Old 04-30-2018, 05:31 PM
 
3,994 posts, read 8,724,794 times
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Quote:
Originally Posted by TimAZ View Post
The risk is priced-in, sure it is. Nothing "crazed" going on here with this Fannie "innovation":

In its latest 'offering' letter for HomeReady Mortgages, Fannie Mae offers what it calls 'innovative underwriting flexibility'...
  • Offers an innovative new feature that supports extended family households: will consider income from a non-borrower household member as a compensating factor in DU to allow for a debt-to-income (DTI) ratio >45% to 50%.
  • Allows non-occupant borrowers, such as a parent.
  • Permits rental income from an accessory dwelling unit (such as a basement apartment).
  • Allows broader income (updated guidelines provide documentation flexibility).
...
"It could be a credit problem, it could be an income problem, it could be an employment history problem, it could be a debt-ratio problem. There are a number of things that can affect a person's situation," said Chris O'Connell, a licensed mortgage loan officer with Nations Reliable Lending.
Mortgage giant Fannie Mae recognizes these hardships, and in response will soon offer a new kind of mortgage with new rules designed to add flexibility for borrowers.
"They've recognized that households have changed and our guidelines need to change with it," said O'Connell.
HomeReady will consider incomes from others planning to live in the house without being a borrower on the loan.
This means, if you live with parents, siblings, working children or maybe a roommate, as long as they make 30 percent of the household income, Fannie will include their money to help you qualify for a loan.
These are being called "non-borrowers" by Fannie.
This seems like a poor idea and will be abused. If you aren’t on the hook for the mortgage, you shouldn’t be having your income considered when the loan is given out
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