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Old 09-30-2008, 08:18 PM
 
3,627 posts, read 12,558,037 times
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Even when I got my loan with 10% down and PMI, I bought less of a house than the bank told me I could qualify for. I felt it was more important to rebuild some savings for a cushion than have a bigger home since the down payment took most of my savings [did not touch my 403(b) though]. Good credit score, decent income, good start on retirement savings. Only thing I really could have done better was wait to save the 20% down but the interest rate was good and the payments were still less than I could rent a comparable house for........so

Wow. I am really seeing what a house of cards was created to support this mess.

Life is not fair, I know, but it really is unfair to those of us who NEVER ever made a late payment to be paying this insurance when others were not to have to foot the bill for this mess.
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Old 10-01-2008, 01:02 AM
 
Location: Texas
42,617 posts, read 50,816,605 times
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It's all so shocking. When I wanted a car lease, I had to fax them a freakin' paystub...how did these people get away with this?
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Old 10-01-2008, 01:18 AM
jco
 
Location: Austin
2,120 posts, read 5,901,130 times
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Well, we put 20% down on our rental, but we purchased another house this year and have to pay PMI. Am I the only one out there paying this? Should I be looking into getting this taken off?
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Old 10-01-2008, 01:23 AM
 
Location: RSM
5,113 posts, read 17,187,746 times
Reputation: 1884
Quote:
Originally Posted by cardinal2007 View Post
What I find interesting about some of this, is that the holder of the 20% 2nd mortgage can veto a short-sale if they want. So any sales for less than 80% of the previous selling price are rejected. They become foreclosures, and they usually sell for less than they would've in short sale. Most of the time people would say this is a stupid idea. But look at it from the 2nd mortgage bank, in short-sale scenario they are guaranteed $0 in return, in a foreclosure if they even have a 1% chance of getting more money the by expectation they might get $5000 * .01 = $50, multiply by 100,000 houses and that is $5M. $5M > 0, so it makes sense for them to go to foreclosure each and everytime they would get 0 on short-sale.
I think this is the main reason I keep seeing short-sales become foreclosures, I don't think if the same bank held all the liens they would be so dumb.


That 80:20 mortgage setup was a piece of pure genius, an amazing way of dooming the housing market, just amazing. There are other things like this, but this one I think really takes the cake.

2nd mortgage -- A loan made during the time of historically unprecendent housing prices such that if the price of a house falls by 20% or more it becomes practically worthless (the loan not the house).
this situation is what happened to me, though the second loan was a refi loan instead. it was a 30k loan and the primary loan was about 170k. primary bank sold the loan to a trust who sold the home to me and then the secondary vetoed the deal after first acquiring a 2 week extension on the deadline(no idea how but my realtor said it was legal) and then doing it at the 11th hour at the end of business on the last day they could do it(which was a week before closing). really pissed me off because we had everything ready, all our stuff ready to pack(moving from CA to CO), and all the arrangements made with work and movers. ruined my summer. the house is still languishing in foreclosure and im sure legal fees have made it an even bigger loss. the redeeming bank was gmac(ditech?) and we couldnt get ahold of anyone there to try and get them to change their minds.. too much beaurocracy

as far as PMI, we were going to use an FHA loan. 3% down, 1.5% PMI paid upfront with a small monthly PMI until we get under 20%
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Old 10-01-2008, 05:35 AM
 
Location: Los Angeles Area
3,306 posts, read 3,374,666 times
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Quote:
Originally Posted by stan4 View Post
It's all so shocking. When I wanted a car lease, I had to fax them a freakin' paystub...how did these people get away with this?
Amazing. You better write to CNN, they need another story about the "credit crunch" and how the average joe is getting beaten up by...hmm....having to verify their income before they get a loan.
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Old 10-01-2008, 10:33 AM
 
Location: Texas
42,617 posts, read 50,816,605 times
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What's extra stupid is that I had to show a paystub and get employer verification to buy a $100,000 car, but the mortgage company didn't ask for any verification of anything when they approved me for a $500,000 home loan. We didn't wind up buying the house, but I thought that was really weird. I even asked the home loan guy, "Uh, don't you want some kind of verification?" He said my credit score was good enough for them. Once again...makes no sense.
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Old 10-01-2008, 11:40 AM
 
3,627 posts, read 12,558,037 times
Reputation: 2683
Quote:
Originally Posted by jco View Post
Well, we put 20% down on our rental, but we purchased another house this year and have to pay PMI. Am I the only one out there paying this? Should I be looking into getting this taken off?
I asked about getting it taken off [I am currently at 85% ] and they said no way - even though all is perfect. LOL maybe I should run out and take a 2nd mortgage to pay it down. Good grief.
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Old 01-17-2019, 12:22 PM
 
Location: Holly Neighborhood, AUSTINtx
3,497 posts, read 5,172,552 times
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....old thread I know but I'm wondering after reading some articles from 10 years ago is it still possible for borrowers to use piggyback loans to avoid PMI? I bought in 2000 (FHA) and was never offered an 80/20 by my lenders only a single loan plus PMI. It seems like if a section of the borrowing population is avoiding PMI the system as a whole will be much more vulnerable as a result. I can see the counterargument being that PMI makes housing less affordable to those lower on the socioeconomic ladder, but a world where PMI is elective seems to make for a moral hazard at the national level and will promote risky behavior.
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Old 01-17-2019, 01:22 PM
 
353 posts, read 178,671 times
Reputation: 447
Hmm, someone who knows the details of PMI can verify this but I always thought PMI only covers the amount over 80% of the purchase price. In that case it's no difference from a primary loan issuer's point of view between PMI and a second mortgage.
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Old 01-18-2019, 08:41 AM
 
Location: Chicago area
8,350 posts, read 12,714,108 times
Reputation: 15082
No way. I got a mortgage back in October and they check your credit reports, employment, require statements from banks, brokerages and everything. If you got a piggyback loan it would be discovered.
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