Menu

Home › Forums › Housing › I am shocked. Shocked! Conforming limits going back up. › bearishgurl wrote: Amount of

November 18, 2011 at 10:58 AM #733204
(former)FormerSanDiegan
Participant

[quote=bearishgurl]
Amount of MIP deposited (assuming all pymts are timely made):

by 13th month of ownership = $17,587.64
by 25th month of ownership = $22,403.96
by 37th month of ownership = $27,220.28

Is this enough cash to protect HUD (another acronym for “gubment”) if this borrower should default in these first three critical years??

[/quote]

It depends on the default rate…

If the default rate is 10%, that’s 175K per foreclosure through month 13 and 275K per foreclosure through month 37.

If the 3-year default rate is 10%, I don;t think HUD would lose much on that 730K loan. (asusming prices don’tall more than 10%).

In fact if they can charge these rates and get a 10% default rate in a market where prices are flat, they will make money hand over fist (and make up for the losses they are currently suffering on previous loans where the rates they set were too low).