Rustico: “…wamu… LTV had recently been changed from 95 to 75”
For months, I’ve been reading that home prices in the near future would be dictated by 20% down requirements and fixed level payments thereafter. But then I see people saying they can get 10% down loans with low initial payments. It didn’t make any sense to me, but HLS and others apparently could still find dumb lenders willing to give cheap high-risk loans.
If I were a lender in California, land of the non-recourse mortgage loan, I sure wouldn’t lend to just about anybody, regardless of FICO, who put less of their own money down than a conservative estimate of the possible 5-year decline in the future market price of the home. Practically speaking, you can’t charge enough in basis points to cover the risk of that loss (unless the taxpayers are providing you with underpriced guarantees through FHA etc).
HLS and pasadenabroker and others, are there any dumb lenders still out there, meaning ones offering non-recourse loans with less than 20% down?