It is not insane to have a non-recourse loan. Again. I repeat in general a collateral loan for a home is normally a very safe investment for the bank, since historically the price of real estate goes up ( tracking inflation ). It is totally reasonable for the home to be sufficient collateral for a home loan. If the current lenders aren’t happy with the arrangement they should get out of the business. Believe me the vacuum will be filled quickly by new lenders. The current condition of the market is atypical.
About the risk premium comment (ucodegen) if interest rates continue to climb then this will force the price of real estate to drop further. With tightening lending standards, high interest rates, and weak income growth comes lower affordability which in the end will cause prices to drop further. Again if we let the market regulate itself in the long run it will probably work better than the gov trying to patch up a sinking ship.
If your are foreclosed on and the lender doesn’t want your business then you rent. If you have strong income (100000+) and sound fundamentals (good down payment)other than your foreclosure and you want to buy a $300000 instead of the $700000 house that you bought in 2005 I have a feeling that there will be lenders out there who will be interested in your business. MONEY TALKS PEOPLE!
