First I didn’t believe it, but I called my local BofA branch, and they confirmed all the information in OP.
The friendly clerk explained that they are able to borrow unlimited money from the fed at about 2%, so 4.something% is good return.
She also volunteered to explain why are they looking for low credit score/high debt types. The fact is, you have to be unable to pay your full mortgage to qualify for future govt bailout (of course, banks do know what exactly that bailout is going to look like and when does it kick in). And if you don’t qualify for the bailout, the bank will have to assume the risk itself.
Unfortunately, my credit score is too high to qualify for this particular offer. But luckily she found something suitable for me. So now I am pre-approved for 116% LTV loan at 4.78%, as long as the price is above $1.12M. It’s hard to find a home like that anymore, but I’ll do my best.
Too bad Jim the Realtor has sold his Mesa Norte listing already…
