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  • May 12, 2008 at 1:27 PM #12712
    Ex-SD
    Participant

    You probably thought nothing-down mortgage loans disappeared in the wake of the American subprime lending crisis, which has ensarled much of the world in a credit crunch.

    They didn’t. Even more surprising, many Americans can still buy homes with nothing down thanks in large part to the federal government and a legal loophole that lets builders and bankers ensure a steady stream of asset-challenged borrowers for taxpayer-insured loans.

    Story here:
    http://www.msnbc.msn.com/id/24580917/

    May 12, 2008 at 2:00 PM #202743
    PadreBrian
    Participant

    Yeah, they have been doing this for a while now. We have talked about it before. The ONLY good news is that in order to get the loan you have to meet the income doc requirements and have a good fico. AND you can only have one of these loans at a time. So basically you can’t get a loan you can’t pay for.

    May 12, 2008 at 2:00 PM #202791
    PadreBrian
    Participant

    Yeah, they have been doing this for a while now. We have talked about it before. The ONLY good news is that in order to get the loan you have to meet the income doc requirements and have a good fico. AND you can only have one of these loans at a time. So basically you can’t get a loan you can’t pay for.

    May 12, 2008 at 2:00 PM #202875
    PadreBrian
    Participant

    Yeah, they have been doing this for a while now. We have talked about it before. The ONLY good news is that in order to get the loan you have to meet the income doc requirements and have a good fico. AND you can only have one of these loans at a time. So basically you can’t get a loan you can’t pay for.

    May 12, 2008 at 2:00 PM #202814
    PadreBrian
    Participant

    Yeah, they have been doing this for a while now. We have talked about it before. The ONLY good news is that in order to get the loan you have to meet the income doc requirements and have a good fico. AND you can only have one of these loans at a time. So basically you can’t get a loan you can’t pay for.

    May 12, 2008 at 2:00 PM #202839
    PadreBrian
    Participant

    Yeah, they have been doing this for a while now. We have talked about it before. The ONLY good news is that in order to get the loan you have to meet the income doc requirements and have a good fico. AND you can only have one of these loans at a time. So basically you can’t get a loan you can’t pay for.

    May 12, 2008 at 2:17 PM #202894
    Ex-SD
    Participant

    I knew about most of what they talked about in that article but I didn’t know that they were still allowing the “not for profit organizations” to gift the 3% down payment.

    From the article:
    “But for those who lack the wherewithal to put even a little skin in the game, there’s a workaround: a not-for-profit organization can give prospective buyers the teensy downpayment. The spigot is wide open. Of the 180,881 loans that the FHA insured in the first half of fiscal 2008, 36.7 percent, or 66,337, were seller-funded. With home builders and sellers desperate to make sales in a slowing real estate market, this percentage is likely to grow.”

    This is simply going to cause a repeat of the mess that the housing industry is presently in. It has been demonstrated for many, many years by banks and companies who fund loans for big-ticket items to people who do not put a down payment on the product will quickly see a very large number of the borrowers default within the first one to two years. Anyone who has ever been involved in retail management of big-ticket, retail products learns this when they make the mistake of giving credit to people who can’t afford a down payment.

    May 12, 2008 at 2:17 PM #202860
    Ex-SD
    Participant

    I knew about most of what they talked about in that article but I didn’t know that they were still allowing the “not for profit organizations” to gift the 3% down payment.

    From the article:
    “But for those who lack the wherewithal to put even a little skin in the game, there’s a workaround: a not-for-profit organization can give prospective buyers the teensy downpayment. The spigot is wide open. Of the 180,881 loans that the FHA insured in the first half of fiscal 2008, 36.7 percent, or 66,337, were seller-funded. With home builders and sellers desperate to make sales in a slowing real estate market, this percentage is likely to grow.”

    This is simply going to cause a repeat of the mess that the housing industry is presently in. It has been demonstrated for many, many years by banks and companies who fund loans for big-ticket items to people who do not put a down payment on the product will quickly see a very large number of the borrowers default within the first one to two years. Anyone who has ever been involved in retail management of big-ticket, retail products learns this when they make the mistake of giving credit to people who can’t afford a down payment.

    May 12, 2008 at 2:17 PM #202834
    Ex-SD
    Participant

    I knew about most of what they talked about in that article but I didn’t know that they were still allowing the “not for profit organizations” to gift the 3% down payment.

    From the article:
    “But for those who lack the wherewithal to put even a little skin in the game, there’s a workaround: a not-for-profit organization can give prospective buyers the teensy downpayment. The spigot is wide open. Of the 180,881 loans that the FHA insured in the first half of fiscal 2008, 36.7 percent, or 66,337, were seller-funded. With home builders and sellers desperate to make sales in a slowing real estate market, this percentage is likely to grow.”

    This is simply going to cause a repeat of the mess that the housing industry is presently in. It has been demonstrated for many, many years by banks and companies who fund loans for big-ticket items to people who do not put a down payment on the product will quickly see a very large number of the borrowers default within the first one to two years. Anyone who has ever been involved in retail management of big-ticket, retail products learns this when they make the mistake of giving credit to people who can’t afford a down payment.

    May 12, 2008 at 2:17 PM #202810
    Ex-SD
    Participant

    I knew about most of what they talked about in that article but I didn’t know that they were still allowing the “not for profit organizations” to gift the 3% down payment.

    From the article:
    “But for those who lack the wherewithal to put even a little skin in the game, there’s a workaround: a not-for-profit organization can give prospective buyers the teensy downpayment. The spigot is wide open. Of the 180,881 loans that the FHA insured in the first half of fiscal 2008, 36.7 percent, or 66,337, were seller-funded. With home builders and sellers desperate to make sales in a slowing real estate market, this percentage is likely to grow.”

    This is simply going to cause a repeat of the mess that the housing industry is presently in. It has been demonstrated for many, many years by banks and companies who fund loans for big-ticket items to people who do not put a down payment on the product will quickly see a very large number of the borrowers default within the first one to two years. Anyone who has ever been involved in retail management of big-ticket, retail products learns this when they make the mistake of giving credit to people who can’t afford a down payment.

    May 12, 2008 at 2:17 PM #202763
    Ex-SD
    Participant

    I knew about most of what they talked about in that article but I didn’t know that they were still allowing the “not for profit organizations” to gift the 3% down payment.

    From the article:
    “But for those who lack the wherewithal to put even a little skin in the game, there’s a workaround: a not-for-profit organization can give prospective buyers the teensy downpayment. The spigot is wide open. Of the 180,881 loans that the FHA insured in the first half of fiscal 2008, 36.7 percent, or 66,337, were seller-funded. With home builders and sellers desperate to make sales in a slowing real estate market, this percentage is likely to grow.”

    This is simply going to cause a repeat of the mess that the housing industry is presently in. It has been demonstrated for many, many years by banks and companies who fund loans for big-ticket items to people who do not put a down payment on the product will quickly see a very large number of the borrowers default within the first one to two years. Anyone who has ever been involved in retail management of big-ticket, retail products learns this when they make the mistake of giving credit to people who can’t afford a down payment.

    May 12, 2008 at 2:43 PM #202845
    patientlywaiting
    Participant

    Nobody expects to buy with a substantial down-payment anymore. The market is simply adjusting to that new reality. Everybody will pay a little bit more.

    It’s like buying electronics at Best Buy. The person who buys at 0% financing, no payment for 6 months, is getting a subsidy from the guy who pays cash.

    May 12, 2008 at 2:43 PM #202929
    patientlywaiting
    Participant

    Nobody expects to buy with a substantial down-payment anymore. The market is simply adjusting to that new reality. Everybody will pay a little bit more.

    It’s like buying electronics at Best Buy. The person who buys at 0% financing, no payment for 6 months, is getting a subsidy from the guy who pays cash.

    May 12, 2008 at 2:43 PM #202870
    patientlywaiting
    Participant

    Nobody expects to buy with a substantial down-payment anymore. The market is simply adjusting to that new reality. Everybody will pay a little bit more.

    It’s like buying electronics at Best Buy. The person who buys at 0% financing, no payment for 6 months, is getting a subsidy from the guy who pays cash.

    May 12, 2008 at 2:43 PM #202798
    patientlywaiting
    Participant

    Nobody expects to buy with a substantial down-payment anymore. The market is simply adjusting to that new reality. Everybody will pay a little bit more.

    It’s like buying electronics at Best Buy. The person who buys at 0% financing, no payment for 6 months, is getting a subsidy from the guy who pays cash.

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