Home Loans

[TheBreeze]

My one reason? Well, they don’t call ’em liar loans for nothing. 😉 In any event, hopefully all of this stated income, no doc, 100% crud will go away here over the next few months and only those that can truly afford a home will be able to buy one. My guess is that the “stated” loans were used more by speculators to get into spec homes than it was by families looking to get into a home they couldn’t afford. It will be no great loss to society if these types of loans are banished forever.

[HLS]

Of course you are correct. They weren’t intended to be outright LIAR loans though that is what they became, and I’d say exclusively for some mortgage originators.
They wouldn’t be able to do a full doc loan if their life depended on it…

There is a legit purpose for these loans. I agree with you about them being crud.. The 100% stated still exists with a high enough score, but nothing like it was.

Plenty of owner occupied loans were done stated. LOTS of people have $200K in equity today because they went stated in 2002-03.. Non owner high LTV are never as easy.

What’s unfair to me is although everything to a lender is risk & reward, they still look at credit score first. Some people have a really crappy credit score but piles of equity.
Even with a 500 score, If you own your home outright and want to borrow 30% of the value to get cash out, pay off debt and raise your score, about the only option you have is hard money lender, with rates starting at over 10% and a prepay penalty.
But with a 750 score, you can get 100% financing.
In reality, which loan is riskier, regardless of score ?

Personally, I thought the local market was getting a bit frothy in 2002-2003, and it doubled from there.

It CAN’T be my decision who should APPLY for a loan. The lender’s don’t make it our business to follow people around snooping. They are in the business of lending money, and should have risk factors built in.

If a Wal-Mart worker wants to claim $10,000 a month income,
even with an 800 score, I don’t know if lender will approve it or not.

I think that your original question had some scepticism/sarcasm behind it, and I don’t think that my reply was what you expected, if you expected a reply at all.

I don’t blame you. The industry was mostly people with get rich quick mentalities, with no business background, just out to make money. Most people still get screwed on at least one part of their loan. Losers got rich. They don’t know what the word integrity means. Some of these people are gone. They weren’t ever in it for the customer. The industry deserves the reputation that it has.

Even if you were violated on a $300K mortgage and the house went up to $700K, nobody seem to care.

Some day traders of the 90’s became loan originators, and are gone. Not sure what they are doing now, perhaps selling used cars. There are definitely people that are losing their homes today because they are in a crappy loan due to unethical advice from a slimeball.

As in anything, people fall for misleading ads, pitches, scams and tricks. They don’t take the time to learn or understand their options. They trust friends, family or relatives that don’t have to earn their business, and it’s all about what is probably the largest financial decision of their lives.

For $500 to review other loan docs and make sure people understand what they are getting into, some people laugh, yet many have made mistakes that have cost them tens of thousands of dollars.

Many well educated people have been fooled by a mortgage.
I just tell people the truth.

[HLS]

Of course you are correct. They weren’t intended to be outright LIAR loans though that is what they became, and I’d say exclusively for some mortgage originators.
They wouldn’t be able to do a full doc loan if their life depended on it…

There is a legit purpose for these loans. I agree with you about them being crud.. The 100% stated still exists with a high enough score, but nothing like it was.

Plenty of owner occupied loans were done stated. LOTS of people have $200K in equity today because they went stated in 2002-03.. Non owner high LTV are never as easy.

What’s unfair to me is although everything to a lender is risk & reward, they still look at credit score first. Some people have a really crappy credit score but piles of equity.
Even with a 500 score, If you own your home outright and want to borrow 30% of the value to get cash out, pay off debt and raise your score, about the only option you have is hard money lender, with rates starting at over 10% and a prepay penalty.
But with a 750 score, you can get 100% financing.
In reality, which loan is riskier, regardless of score ?

Personally, I thought the local market was getting a bit frothy in 2002-2003, and it doubled from there.

It CAN’T be my decision who should APPLY for a loan. The lender’s don’t make it our business to follow people around snooping. They are in the business of lending money, and should have risk factors built in.

If a Wal-Mart worker wants to claim $10,000 a month income,
even with an 800 score, I don’t know if lender will approve it or not.

I think that your original question had some scepticism/sarcasm behind it, and I don’t think that my reply was what you expected, if you expected a reply at all.

I don’t blame you. The industry was mostly people with get rich quick mentalities, with no business background, just out to make money. Most people still get screwed on at least one part of their loan. Losers got rich. They don’t know what the word integrity means. Some of these people are gone. They weren’t ever in it for the customer. The industry deserves the reputation that it has.

Even if you were violated on a $300K mortgage and the house went up to $700K, nobody seem to care.

Some day traders of the 90’s became loan originators, and are gone. Not sure what they are doing now, perhaps selling used cars. There are definitely people that are losing their homes today because they are in a crappy loan due to unethical advice from a slimeball.

As in anything, people fall for misleading ads, pitches, scams and tricks. They don’t take the time to learn or understand their options. They trust friends, family or relatives that don’t have to earn their business, and it’s all about what is probably the largest financial decision of their lives.

For $500 to review other loan docs and make sure people understand what they are getting into, some people laugh, yet many have made mistakes that have cost them tens of thousands of dollars.

Many well educated people have been fooled by a mortgage.
I just tell people the truth.

[JWM in SD]

From NFCU website:

100% Financing—HomeBuyers Choice
Ideal for the first-time homebuyer:
15-, 30-, or 40-year fixed rates
No down payment required
No PMI required
Seller concessions up to 4% allowed
Maximum loan-to-value of 101.50%
(includes a HomeBuyers Choice Funding Fee, which can be financed into the loan amount)
Available for loans up to $850,000

This makes me nervous as I have a lot of my family’s operating cash in NFCU.

[JWM in SD]

From NFCU website:

100% Financing—HomeBuyers Choice
Ideal for the first-time homebuyer:
15-, 30-, or 40-year fixed rates
No down payment required
No PMI required
Seller concessions up to 4% allowed
Maximum loan-to-value of 101.50%
(includes a HomeBuyers Choice Funding Fee, which can be financed into the loan amount)
Available for loans up to $850,000

This makes me nervous as I have a lot of my family’s operating cash in NFCU.

[TheBreeze]

HLS,

Yes my original response was sarcastic. And you’ve laid out some decent reasons for stated income loans. However, in the grand scheme of things, stated needs to go away because it is too susceptible to fraud.

Also, I agree with you that a 30% LTV refi to a borrower with a 500 score is much less risky than any 100% LTV loan. I think the high LTV rates is what got us into this whole mess. If borrowers had to put 10% of their own money down on every mortgage, I doubt we would have seen this bubble reach the heights it did.

Unfortunately, the way the system works today (well, as of last Monday anyway), if a borrower can get a 100% LTV mortgage, there are no checks and balances to keep the “V” in “LTV” in check. Appraisers are pushed by everyone to make ridiculously high if not downright fraudulent appraisals, mortgage brokers are shooting themselves in the foot if they question the value of a home and will sometimes commit fraud on the borrower’s application just to make a sale, borrowers just want to get in the house, originators want to make as many loans as possible so that they will have more to quickly package and sell, the hedge funds buying these loans on the back end were borrowing from Citi, JP Morgan, Bear Stearns, and Goddam Sachs at 5% in order to purchase these mortgages that would supposedly yield 7% or greater.

Once the borrower was able to take his skin out of the game and get a 100%+ LTV loan, everyone else was using somebody else’s money and there was no incentive for any body to use common sense. Dang it all.

[TheBreeze]

HLS,

Yes my original response was sarcastic. And you’ve laid out some decent reasons for stated income loans. However, in the grand scheme of things, stated needs to go away because it is too susceptible to fraud.

Also, I agree with you that a 30% LTV refi to a borrower with a 500 score is much less risky than any 100% LTV loan. I think the high LTV rates is what got us into this whole mess. If borrowers had to put 10% of their own money down on every mortgage, I doubt we would have seen this bubble reach the heights it did.

Unfortunately, the way the system works today (well, as of last Monday anyway), if a borrower can get a 100% LTV mortgage, there are no checks and balances to keep the “V” in “LTV” in check. Appraisers are pushed by everyone to make ridiculously high if not downright fraudulent appraisals, mortgage brokers are shooting themselves in the foot if they question the value of a home and will sometimes commit fraud on the borrower’s application just to make a sale, borrowers just want to get in the house, originators want to make as many loans as possible so that they will have more to quickly package and sell, the hedge funds buying these loans on the back end were borrowing from Citi, JP Morgan, Bear Stearns, and Goddam Sachs at 5% in order to purchase these mortgages that would supposedly yield 7% or greater.

Once the borrower was able to take his skin out of the game and get a 100%+ LTV loan, everyone else was using somebody else’s money and there was no incentive for any body to use common sense. Dang it all.

[flyer]

Loans from Builders??

If we do buy in the future, it will probably be from a builder. We won’t be able to use a private mortgage broker if we want to receive their incentives (currently $30K for the homes we’re looking at.)

The question is:
What questions/product type should we
ask/request from their mortgage person to make sure we are getting the best deal possible? We’ll be paying the loan off in 1-3 years, and have an 800+ credit score, with stable employment history. In a situation like this, when you’re only going to keep the loan for such a short time, it’s hard to know what’s best to do.

Would appreciate your thoughts. . .

[flyer]

Loans from Builders??

If we do buy in the future, it will probably be from a builder. We won’t be able to use a private mortgage broker if we want to receive their incentives (currently $30K for the homes we’re looking at.)

The question is:
What questions/product type should we
ask/request from their mortgage person to make sure we are getting the best deal possible? We’ll be paying the loan off in 1-3 years, and have an 800+ credit score, with stable employment history. In a situation like this, when you’re only going to keep the loan for such a short time, it’s hard to know what’s best to do.

Would appreciate your thoughts. . .

[HLS]

Of course you “speaketh the truth”

Fraud is possible, even in a full doc loan.
The lenders know this.
If you were told that you had a million dollars to loan out,and your income depended on loaning it out, would you only loan to perfect borrowers a penny at a time ?
(And by the way, when the first million is gone, we will give you more) Didn’t think so.

YES, the crazy financing fueled the speculation. It was a mania. I KNEW the housing market would crash, I just didn’t know when. It wasn’t a difficult decision for me to sell all my rentals. I’m no genius.

What we all have to realize is that the govt (in theory) has the best and brightest working for and advising them, ala Greenspan, et al. If you and I knew the housing would collapse, don’t you think they did too ?
Regardless of the “official” statements, they KNEW there was a problem, but ignored it.

In ECON 101 you learn that extending credit is a risk. extending 100% financing is suicide, unless you compensate for that risk. Easy margin financing also contributed to 1929 stock margin crash. (Like 5% or 10% down) History PROVES that it’s only a matter of WHEN the collapse happens, not IF it will happen.

When you buy something using a credit card, you are financing 100%. When you pay in full, you don’t owe a penny in interest, very convenient. However, the compenstaing factor for the risk is charging 15%-30% interest instead of 8% on a home. You have nothing invested except your credit score on either.

With a mortgage, charging 8% instead of 6% was never worth the risk, but because of mania & marketing average people got swept up, and bid the price of the underlying product up.
In economic theory, loaning 100% today is no more risky than it was 5 years ago, except that consumer sentiment has changed and prices are dropping, not rising.

There are 5 fingers to point blame with. Govt, Wall Street, Lender, Broker, and Consumer. Whose fault is it really ?

I never bought a home 100%, that option didn’t exist. I did get some easy no qualifying assumables, and owner carrybacks though. I survived the 90’s and had my wide eyes open a few years ago, shaking my head all the way up and now nodding my head on the way down.
In my younger days, I could have been easily tempted by 100% financing. I understand the lure.

Robert Allen had a famous book, Nothing Down For the 90’s. I never made any offers like that, but I knew what they were. Never went to his seminars either, I think that he still is doing them, pumping people up and collecting fees.
What are Carlton Sheets and John Beck doing these days ?
Wade Cook went BK.

[HLS]

Of course you “speaketh the truth”

Fraud is possible, even in a full doc loan.
The lenders know this.
If you were told that you had a million dollars to loan out,and your income depended on loaning it out, would you only loan to perfect borrowers a penny at a time ?
(And by the way, when the first million is gone, we will give you more) Didn’t think so.

YES, the crazy financing fueled the speculation. It was a mania. I KNEW the housing market would crash, I just didn’t know when. It wasn’t a difficult decision for me to sell all my rentals. I’m no genius.

What we all have to realize is that the govt (in theory) has the best and brightest working for and advising them, ala Greenspan, et al. If you and I knew the housing would collapse, don’t you think they did too ?
Regardless of the “official” statements, they KNEW there was a problem, but ignored it.

In ECON 101 you learn that extending credit is a risk. extending 100% financing is suicide, unless you compensate for that risk. Easy margin financing also contributed to 1929 stock margin crash. (Like 5% or 10% down) History PROVES that it’s only a matter of WHEN the collapse happens, not IF it will happen.

When you buy something using a credit card, you are financing 100%. When you pay in full, you don’t owe a penny in interest, very convenient. However, the compenstaing factor for the risk is charging 15%-30% interest instead of 8% on a home. You have nothing invested except your credit score on either.

With a mortgage, charging 8% instead of 6% was never worth the risk, but because of mania & marketing average people got swept up, and bid the price of the underlying product up.
In economic theory, loaning 100% today is no more risky than it was 5 years ago, except that consumer sentiment has changed and prices are dropping, not rising.

There are 5 fingers to point blame with. Govt, Wall Street, Lender, Broker, and Consumer. Whose fault is it really ?

I never bought a home 100%, that option didn’t exist. I did get some easy no qualifying assumables, and owner carrybacks though. I survived the 90’s and had my wide eyes open a few years ago, shaking my head all the way up and now nodding my head on the way down.
In my younger days, I could have been easily tempted by 100% financing. I understand the lure.

Robert Allen had a famous book, Nothing Down For the 90’s. I never made any offers like that, but I knew what they were. Never went to his seminars either, I think that he still is doing them, pumping people up and collecting fees.
What are Carlton Sheets and John Beck doing these days ?
Wade Cook went BK.

[HLS]

Of course you “speaketh the truth”

Fraud is possible, even in a full doc loan.
The lenders know this.
If you were told that you had a million dollars to loan out,and your income depended on loaning it out, would you only loan to perfect borrowers a penny at a time ?
(And by the way, when the first million is gone, we will give you more) Didn’t think so.

YES, the crazy financing fueled the speculation. It was a mania. I KNEW the housing market would crash, I just didn’t know when. It wasn’t a difficult decision for me to sell all my rentals. I’m no genius.

What we all have to realize is that the govt (in theory) has the best and brightest working for and advising them, ala Greenspan, et al. If you and I knew the housing would collapse, don’t you think they did too ?
Regardless of the “official” statements, they KNEW there was a problem, but ignored it.

In ECON 101 you learn that extending credit is a risk. extending 100% financing is suicide, unless you compensate for that risk. Easy margin financing also contributed to 1929 stock margin crash. (Like 5% or 10% down) History PROVES that it’s only a matter of WHEN the collapse happens, not IF it will happen.

When you buy something using a credit card, you are financing 100%. When you pay in full, you don’t owe a penny in interest, very convenient. However, the compenstaing factor for the risk is charging 15%-30% interest instead of 8% on a home. You have nothing invested except your credit score on either.

With a mortgage, charging 8% instead of 6% was never worth the risk, but because of mania & marketing average people got swept up, and bid the price of the underlying product up.
In economic theory, loaning 100% today is no more risky than it was 5 years ago, except that consumer sentiment has changed and prices are dropping, not rising.

There are 5 fingers to point blame with. Govt, Wall Street, Lender, Broker, and Consumer. Whose fault is it really ?

I never bought a home 100%, that option didn’t exist. I did get some easy no qualifying assumables, and owner carrybacks though. I survived the 90’s and had my wide eyes open a few years ago, shaking my head all the way up and now nodding my head on the way down.
In my younger days, I could have been easily tempted by 100% financing. I understand the lure.

Robert Allen had a famous book, Nothing Down For the 90’s. I never made any offers like that, but I knew what they were. Never went to his seminars either, I think that he still is doing them, pumping people up and collecting fees.
What are Carlton Sheets and John Beck doing these days ?
Wade Cook went BK.

[CardiffBaseball]

I have purchased homes twice using VA Loans, at 100%. I was very lucky each time, in that I had to sell at less than 7 years, and I didn’t lose. Technically on my Ohio house I did lose in that the county made me replace the Septic, however, the home value went up enough so that it only cost me about 7K at closing. Had the value of the house gone down, or stayed flat, I’d could not have afforded to close.

[CardiffBaseball]

I have purchased homes twice using VA Loans, at 100%. I was very lucky each time, in that I had to sell at less than 7 years, and I didn’t lose. Technically on my Ohio house I did lose in that the county made me replace the Septic, however, the home value went up enough so that it only cost me about 7K at closing. Had the value of the house gone down, or stayed flat, I’d could not have afforded to close.

[CardiffBaseball]

I have purchased homes twice using VA Loans, at 100%. I was very lucky each time, in that I had to sell at less than 7 years, and I didn’t lose. Technically on my Ohio house I did lose in that the county made me replace the Septic, however, the home value went up enough so that it only cost me about 7K at closing. Had the value of the house gone down, or stayed flat, I’d could not have afforded to close.

[Author]

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