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Some slight mis-information always gets out, 8 or 9% is for hard-money private loans. There are "some portfolio lenders" who will offer you a ALT- stated loan or 12 months bank statement in the 4s or low 5s. It just depends on the state. I know CA,WA,NJ,NY,CT still have them as I just mentioned. The majority of mortgage brokers 95-to-98% will not have this loan since it is no longer Freddie or Fannie purchasable as of 2013. It is a portfolio or niche loan by smaller lenders. Heck, who knows, it may change. I know Countrywide execs started a new large company not too far from their former HQ about a year ago.
I still get emails today from a niche lender doing stated at 5%, just in CA though. Sure, all the subprime hard money people have it in the 8.99 area. hold on people, it is these loans are coming back even the horrible stuff.
It doesn't take a genius to know that as one broker told me today, "With the new Dodd-Frank law, there are always lenders and financial people creating a new program to get around what they just disallowed. It is America. It is capitalism, big banking. C'mon, it will never die completely. But people with 500 credit scores, one year after a BK, or foreclosure getting into a home with little down is just irresponsible. As long as someone will buy that loan and they get paid, it is about their bottom line. Banking Deja vu. Just look at credit card balance transfers coming back.
The ability to purchase with abbreviated documentation is shrinking every day. Google "ability-to-repay and qualified mortgage rule" and you will get this http://files.consumerfinance.gov/f/201301_cfpb_ability-to-repay-summary.pdf really ugly document that goes into effect January 10, 2014. No one is talking about it because they are hoping it will go away, that it's not true, or it will upset the sales staff.
Tougher changes are coming and the buying public could very well get caught off guard (not to mention the lending/real estate community).
Private money will always be there for a niche. Dodd-Frank wont' stop it. They pass a law and there are lawyers and lending execs crafting a new program that virtually does the same thing. It is just an evolving game.
I still get emails today from a niche lender doing stated at 5%, just in CA though. Sure, all the subprime hard money people have it in the 8.99 area. hold on people, it is these loans are coming back even the horrible stuff.
It doesn't take a genius to know that as one broker told me today, "With the new Dodd-Frank law, there are always lenders and financial people creating a new program to get around what they just disallowed. It is America. It is capitalism, big banking. C'mon, it will never die completely. But people with 500 credit scores, one year after a BK, or foreclosure getting into a home with little down is just irresponsible. As long as someone will buy that loan and they get paid, it is about their bottom line. Banking Deja vu. Just look at credit card balance transfers coming back.
Maybe you should just start a new thread "Is the FHA Back to Work Program a Good Idea?"
I am not a fan of FHA loans with their forever MIP or low down payments. If people are serious buyers, they should have a minimum of 10% down, while other publicly known media experts claim to have 20% down. Twenty is optimal. I just got an update that even with the "Qualified Mortgage Rule "the few lenders who still offer stated income (now by a different name) are in compliance with 2014 legislation.
The low down payment low credit scores were the main culprit of the housing demise. You think people who put down 20% are just going to walk away if rent and housing payments are equal when put side by side? We know a large majority of the sub-prime 500 credit people (full-doc) with zero down defaulted, WAMU's 100% loan with 1% negative amortization payments were also high in defaults. Stated income and full-doc zero down loans fell later, basically a domino effect.
I am not a fan of FHA loans with their forever MIP or low down payments. If people are serious buyers, they should have a minimum of 10% down, while other publicly known media experts claim to have 20% down. Twenty is optimal. I just got an update that even with the "Qualified Mortgage Rule "the few lenders who still offer stated income (now by a different name) are in compliance with 2014 legislation.
The low down payment low credit scores were the main culprit of the housing demise. You think people who put down 20% are just going to walk away if rent and housing payments are equal when put side by side? We know a large majority of the sub-prime 500 credit people (full-doc) with zero down defaulted, WAMU's 100% loan with 1% negative amortization payments were also high in defaults. Stated income and full-doc zero down loans fell later, basically a domino effect.
Among many, your most glaring error is: We know a large majority of the sub-prime 500 credit people (full-doc) with zero down defaulted. A large majority? 500 Fico 80/20s, how many of those even happened? WAMU's neg-am loans were an incalculably low factor. Where is Ameriquest in your analysis? Where is the Braintree region of Countrywide sub-prime, which had a document lab where they created income documents?
80/20s with closing costs rolled in were available across a very wide fico bandwidth. I did hundreds for people with great credit, where, upon closing, I just knew it was a matter of time. Borrowers demanding loans with 55-58% dti. 100% Stated Investment properties: here's your tipping point. This is why Vegas, Florida, and AZ were hit first, and hard.
Today, there is so much due diligence, QM is pushing dti way down, and the economy needs housing. I find lending to be quite responsible at the 3.5% - 5% down payment level.
I recall the 560, 580 zero down loans, just semantics my friend. I shied away from doing sub-prime borrowers and dealt with people over 660 mainly and above. Yes, we do know the sub-prime borrowers started the domino effect.
Once the first group defaults, home values couldn't continue rising, well no bleep!!.
So, even "A" credit borrowers became affected who got 100-percent loans. Then lenders tightened guidelines but it was all too late.
People always remember largely what happened last or what is fed to them through the media since the media appears to be an authority source.
Sure, stated 100% investment loans were wrong and still wrong. I am not defending these type of loans and even refused some primary residence loans as well (e.g. Fedex courier stated $15k /month, I said "No sir". ).
However, I am defending the point that stated loans' LTV should've been lowered to where it was pre-Clinton - 75% no more, and less for investors.
The blanket statement that it is a liars loan is not 100% accurate. Some people made $6k/month but $5k was from a salary job while the other $1k was undocumented p/t side money.
Simply because the majority of America has easy taxes & deductions does not mean someone who earns $1.5M/yr yet deducts $1M has to be left out because of irresponsible borrowers pushing their income up by 10%-50% or brokers falsifying income for borrowers so they get their commission. This is just stuff that never went on where I worked.
It is just over-regulation which will change in time as people's memory fades. Seems to be happening now with the stock market. The rich control the country and they are, still today, getting stated loans through private banking and portfolio lenders.
You left out shady appraisers, strawman flips. Blame countrywide & Bear Stearns only? Wells and BofA had 2nd mortgage stated products that went behind a 1st mortgage.
Zero down loans running rampant is the cause b/c you can just walk away. Today, the banks know if you put a good chunk into it, you ain't walking so quick. Stats don't lie about that. Yet, those 3-5% FHA and Fannie loans are still easy enough to walk away which is why FHA made MI permanent so they get some money back that when defaulting increases.
What happens with a borrower who bought with 3% down in areas that rose 20% last year, and in 2014, they does not go up or for some reason decline. Then, they lose their job. Possibilities of walking are high if renting is less than owning. I see more price reductions than price increases on the MLS in the states you mentioned.
Quote:
Originally Posted by Pfhtex
Among many, your most glaring error is: We know a large majority of the sub-prime 500 credit people (full-doc) with zero down defaulted. A large majority? 500 Fico 80/20s, how many of those even happened? WAMU's neg-am loans were an incalculably low factor. Where is Ameriquest in your analysis? Where is the Braintree region of Countrywide sub-prime, which had a document lab where they created income documents?
80/20s with closing costs rolled in were available across a very wide fico bandwidth. I did hundreds for people with great credit, where, upon closing, I just knew it was a matter of time. Borrowers demanding loans with 55-58% dti. 100% Stated Investment properties: here's your tipping point. This is why Vegas, Florida, and AZ were hit first, and hard.
Today, there is so much due diligence, QM is pushing dti way down, and the economy needs housing. I find lending to be quite responsible at the 3.5% - 5% down payment level.
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