I look at a coworker of mine. Bought in 4S in 2006, put 20% down. Wants to refi to a lower rate but can’t get the LTV to work for a typical 80% loan/value. The house has lost too much value. So he’s stuck paying the extra cost of FHA or doing a loan with a 90% LTV that is a higher rate. He still will save money over his current rate – but not nearly as much.

He’s got great credit. He just bought at a crappy time. He does not plan to sell – even though the house has dropped in value almost $200k since he bought. It’s his family home.

I can see something that would help someone like him – good credit but screwed by the LTV because of depreciation… He tried working with Sheldon – but he couldn’t come up with *enough* cash to bring to the table without borrowing against his 401k. He was unwilling to do that.

Folks with bad credit shouldn’t qualify for prime mortgages. We did that before… it’s called sub-prime for a reason.