[quote=ctr70]Correction…lending has not gone back to the 90’s…it’s gone more back to the 1970’s!
Fha has been around since the 1930’s and is 3.5% down and has had low default rates. VA is 100% and been around since post WWII and has had low default rates. FHA are full income documentation throughly underwritten loans. You can not even begin to compare it with the toxic stuff that was happening from 2002-2007.[/quote]
You sure about that? This chart is 1 1/2 years old, but the story it tells is an UGLY one for FHA loans:
That’s a full-fledged disaster, so I have no idea where you’re getting your information. Inquiring minds would like to know.
[quote=ctr70]
And contrary to popular belief, the toxic loans were Wall Street products for the most part (not Gov loans Fannie, Freddie, FHA, VA). The underwriting guidelines were created by Morgan Stanley, Merril Lynch, Credit Suisse and JP Morgan & they created a secondary market for those loans. [/quote]
Ok, so… those multi-hundred billion dollar losses that We the People are currently eating on Fannie/Freddie loans aren’t real? Those came from Wall Street? While I agree that Wall Street was responsible for a lot of the real dreck… the GSEs clearly underwrote a helluva a lot of bad loans that are generating big losses that We the People are going to be eating for a while.
[quote=ctr70]
FHA and VA have never had super high default rates.[/quote]
Yeah, right up until this cycle…
[quote=ctr70]
So it’s a myth that real estate “used to be” 20% down back in the day or it needs to be 20% down. FHA has never been 20% down and it’s been around since 1934.[/quote]
The average down payment for a SFR loan steadily declined from the early-90s through 2007. (And, again, FHA is its own disaster currently.) I’ll find a graph.
[quote=ctr70]
What we are doing here is classic “throwing the baby out with the bathwater”. Lending standards are OVER-correcting in my opinion. For example, I know a guy with $5 million in the bank but could not show income on his tax returns so he can’t get a conventional loan even with 40% down. He has to buy cash. Now that is plan stupid. [/quote]
This sounds very suspicious. If he’s got “$5 million in the bank” and otherwise sound finances, then he can explain away his tax return. This happens all the time, particularly with real estate investors who often have huge net worths and cash flow but very little in the way of taxable income. If this guy can’t get a loan, then (1) he’s hiding something, (2) he’s not particularly clever, or (3) he’s getting bad advice. I simply don’t buy that he’s some victim because I see folks like this all the time who don’t have the problem you’re describing.
[quote=ctr70]
I think 5% down and throughly underwritten FULL income documentation loan is plenty.[/quote]
In a world of defaulting-is-a-business-decision (which I’m betting you support)… I think you’re smoking crack. But we can agree to disagree.
