Look who's back... (insurance, loan, credit, rate)

[Pfhtex]

It's our old friend, the 80/20! Great for avoiding Mortgage Insurance, as well as destroying the World Economy, the 80/20 "piggyback" loan has returned.

Rates rise, guidelines expand.

As long as the First is Fixed, I think these are smarter/safer loans than, say, the Chenoa FHA Grant program, where you have the additional MIP added to the loan balance.

[docwrangler]

Where are you seeing the 80/20 offered? We primarily use Flagstar, US Bank, and Freedom, and haven't heard a peep out of them, but I'm guessing these are going to be niche lenders that I typically don't work with anyway. It's an interesting prospect, though. I thought we'd seen the end of those!

[Pfhtex]

I'm an FDIC mortgage banker and it will be a proprietary product rolling out nationwide over the next 60 days.

[docwrangler]

Originally Posted by Pfhtex

I'm an FDIC mortgage banker and it will be a proprietary product rolling out nationwide over the next 60 days.

Interesting news!

[SmartMoney]

Rising rates and dimished buyer pools = program and underwriting rules loosening.

All it will take is one consumer suing for ATR when they lose their home in foreclosure.

Deja vu

[Sherifftruman]

Of course, even an 80/20 loan would be fine if the buyer only purchases a home they can afford.

[Pfhtex]

Originally Posted by Sherifftruman

Of course, even an 80/20 loan would be fine if the buyer only purchases a home they can afford.

Yes, and affordability won't be impacted down the road by a rate increasing by 5%.

Projected terms compare very favorably to FHA and Grant Program loans.

[BoBromhal]

in the old days, great credit is really all you needed. 2008 changed all that.

no loan is "too risky" if they underwrite with extenuating circumstances. surely there are ways to mitigate risk. Are there really more than 3 components - DTI (proveable ability to pay); willingness to pay (credit history) and collateral value? Miss on 1? Sure. Just make it up with stronger other 2 factors.