Sub prime: deja vu all over again (documentation, appraisal, foreclosure)
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I found this in my mailbox today. Note the invitation to "cash-out" and the assurance that "we may be able to fund your loan with minimal income documentation and less than perfect credit."
You need to keep up with the news - it's not subprime. It's the same process Fannie Mae rolled out. Rocket (Quicken) hyped up Fannie's Day 1 Certainty for lenders. Google "Fannie Day One" and more info than you want will appear.
In a nutshell, Fannie is tying their DU system into 3rd party services, creating a means for some borrowers to enjoy minimal processing. Self employed can forget about this applying to their scenario. But the employee that's been on the jobs for years, has a few bank accounts, above average to excellent credit can enjoy abbreviated processing. Fannie has been working on this for over a decade. Many employers subscribe to a service that provide us (mortgage lenders) with employment data. Fannie has found a way to automate it for prior and current employers. The next target includes banks to verify compliance of funds and provide answers as required by underwriting (funds have been on deposit, who is on the account, when did earnest money clear).
The end goal here is to be able to apply for a loan today, provide an ID (which some are running thru identity recognition software), sign and close a week later while barely lifting a finger. Collateral underwriter has been building massive appraisal data, Zillow will have an envy crisis. For the past 10 years, all sales data has been tracked, they are almost there. Have you heard about property inspection waivers? (No appraisal required)? That's a result of this data collection.
And add to this automation, what's coming in a decade - the ability to track an individual loan officer's foreclosure rate, how many of this LO's loans were approved, how many loans a year do they do on average, percentage of cures (incorrect estimates). Same with Realtors, same data can be available. How many of this agent's buyers lost their home. The data is there. We will find out just how strong the MBA, NAMB, and NAR are, and if this will be public knowledge.
Sorry, the short response = abbreviated documentation ≠ subprime.
The answer from Smart Money is spot on. The fact is LOTS of the "required paperwork" for mortgages does not really provide very good DATA and the more automated system is not just FASTER and less prone to errors BUT will include MORE USEFUL INFORMATION that will make it is EASY to spot potential scam artists / liars / cheats!
This is a GOOD THING as folks who increase the default rate actually DRIVE UP the cost of not just processing loans BUT ultimately makes interest rates of loans higher for all borrowers. Of course if the savings are not passed on to borrowers but are simply kept by processors / lenders / quasi-public underwriters to offset previous loses that is not quite as nice as making things CHEAPER for consumers but even that should result in a MORE STABLE environment that will be a good thing...
Yes, crap loans are being made! Of course, realtors and mortgage brokers will tell you it's not happening, but it is! That's why we are sitting on the sidelines for now. Apparently we learned nothing from 2008.
Yes, crap loans are being made! Of course, realtors and mortgage brokers will tell you it's not happening, but it is! That's why we are sitting on the sidelines for now. Apparently we learned nothing from 2008.
I have been a mortgage lender since 2003 and I can assure you that there is nothing remotely similar going on now to what was going on then. The media and the doomsday'ers are getting to you.
Yes, crap loans are being made! Of course, realtors and mortgage brokers will tell you it's not happening, but it is! That's why we are sitting on the sidelines for now. Apparently we learned nothing from 2008.
Yes, crap loans are being made! Of course, realtors and mortgage brokers will tell you it's not happening, but it is! That's why we are sitting on the sidelines for now. Apparently we learned nothing from 2008.
Where can I get one of these crap loans you're talking about? I need some more rental houses! Heck you think I'd know being an insider and all.
I have been a mortgage lender since 2003 and I can assure you that there is nothing remotely similar going on now to what was going on then. The media and the doomsday'ers are getting to you.
You proved my point! You and Brandon, the realtor. Of course you are going to say that! We have a realtor, property manager, and loan officer in our extended family. They all have concerns and tell us real estate is going up too fast and loans are getting creative again. It bothers THEM, even though they make a living off of real estate. They don't lie like you two do.
You proved my point! You and Brandon, the realtor. Of course you are going to say that! We have a realtor, property manager, and loan officer in our extended family. They all have concerns and tell us real estate is going up too fast and loans are getting creative again. It bothers THEM, even though they make a living off of real estate. They don't lie like you two do.
It was a real question. Where can I get one of these loans? Thank you, I'll wait for a reply.
You proved my point! You and Brandon, the realtor. Of course you are going to say that! We have a realtor, property manager, and loan officer in our extended family. They all have concerns and tell us real estate is going up too fast and loans are getting creative again. It bothers THEM, even though they make a living off of real estate. They don't lie like you two do.
Guessing none of those relatives have a degree in Economics. The major difference is that home prices are shooting up due to supply and demand now vs. shooting up due to wickedly easy credit then. You may want to take the 'Sharp" out of your moniker.
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