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cindy.
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August 25, 2007 at 8:46 PM #10037August 25, 2007 at 9:43 PM #80972
HLS
ParticipantThere is a HUGE difference between an original “purchase money” loan and a REFI loan, regardless of cash taken out or not.
In most cases, a purchase money loan is NON-recourse debt.
The loan is secured by the property only. You can walk, and it will be on your credit report for 7 years.
There is some talk of getting an IRS 1099 for debt relief, but it may not be true.With a REFI loan, it is recourse debt, which means the lenders servicing unit can come after you for any loss and deliver the 1099 for any amount that is written off.
What could happen and what actually does happen is two different things.
The real question is what is the threshold of pain for a borrower with a 750-800 score who owes $600K on a home worth $400K.. at what point will a prime borrower walk ??
August 25, 2007 at 9:43 PM #81124ParticipantThere is a HUGE difference between an original “purchase money” loan and a REFI loan, regardless of cash taken out or not.
In most cases, a purchase money loan is NON-recourse debt.
The loan is secured by the property only. You can walk, and it will be on your credit report for 7 years.
There is some talk of getting an IRS 1099 for debt relief, but it may not be true.With a REFI loan, it is recourse debt, which means the lenders servicing unit can come after you for any loss and deliver the 1099 for any amount that is written off.
What could happen and what actually does happen is two different things.
The real question is what is the threshold of pain for a borrower with a 750-800 score who owes $600K on a home worth $400K.. at what point will a prime borrower walk ??
August 25, 2007 at 9:43 PM #81105ParticipantThere is a HUGE difference between an original “purchase money” loan and a REFI loan, regardless of cash taken out or not.
In most cases, a purchase money loan is NON-recourse debt.
The loan is secured by the property only. You can walk, and it will be on your credit report for 7 years.
There is some talk of getting an IRS 1099 for debt relief, but it may not be true.With a REFI loan, it is recourse debt, which means the lenders servicing unit can come after you for any loss and deliver the 1099 for any amount that is written off.
What could happen and what actually does happen is two different things.
The real question is what is the threshold of pain for a borrower with a 750-800 score who owes $600K on a home worth $400K.. at what point will a prime borrower walk ??
August 25, 2007 at 9:46 PM #80975luxuryglow
Participant…at what point will a prime borrower walk?
We’ll know more it soon.
August 25, 2007 at 9:46 PM #81108Participant…at what point will a prime borrower walk?
We’ll know more it soon.
August 25, 2007 at 9:46 PM #81127Participant…at what point will a prime borrower walk?
We’ll know more it soon.
August 25, 2007 at 10:02 PM #81117bob2007
ParticipantI would think that a prime borrower with a score of 800 would have put 20% down and had a non-toxic loan. On 600k to 400k they would be walking on 80k (plus sale commissions unless they sell it themselves). I could be wrong, but to me it seems like someone with 800 would be smarter than 100% financing.
August 25, 2007 at 10:02 PM #81137ParticipantI would think that a prime borrower with a score of 800 would have put 20% down and had a non-toxic loan. On 600k to 400k they would be walking on 80k (plus sale commissions unless they sell it themselves). I could be wrong, but to me it seems like someone with 800 would be smarter than 100% financing.
August 25, 2007 at 10:02 PM #80984ParticipantI would think that a prime borrower with a score of 800 would have put 20% down and had a non-toxic loan. On 600k to 400k they would be walking on 80k (plus sale commissions unless they sell it themselves). I could be wrong, but to me it seems like someone with 800 would be smarter than 100% financing.
August 25, 2007 at 10:29 PM #81146TheBreeze
ParticipantWouldn’t a 100% loan with a 2- to 5-year teaser rate be the best way to go as a borrower? You get 2 to 5 years to see if your house goes up in value. If it does, you sell it and cash out. If it doesn’t, you walk away, without much lost. With a 100% ARM, the borrower gets the chance to profit if the house value goes up and doesn’t lose much if the house value goes down.
20% down loans were for suckers during the bubble (03-07) years.
August 25, 2007 at 10:29 PM #81125ParticipantWouldn’t a 100% loan with a 2- to 5-year teaser rate be the best way to go as a borrower? You get 2 to 5 years to see if your house goes up in value. If it does, you sell it and cash out. If it doesn’t, you walk away, without much lost. With a 100% ARM, the borrower gets the chance to profit if the house value goes up and doesn’t lose much if the house value goes down.
20% down loans were for suckers during the bubble (03-07) years.
August 25, 2007 at 10:29 PM #80993ParticipantWouldn’t a 100% loan with a 2- to 5-year teaser rate be the best way to go as a borrower? You get 2 to 5 years to see if your house goes up in value. If it does, you sell it and cash out. If it doesn’t, you walk away, without much lost. With a 100% ARM, the borrower gets the chance to profit if the house value goes up and doesn’t lose much if the house value goes down.
20% down loans were for suckers during the bubble (03-07) years.
August 25, 2007 at 10:32 PM #81128ParticipantWho said anything about a toxic loan ?
(There are actually plenty of high score borrowers that did get fooled into toxic loans)
100% financing was brilliant!
Mortgage interest is some of the cheapest money that you can get. There are people with high credit scores who financed 100% just because they could.Their cash is worth more to them than the rate on a 20% 2nd.
Many people put money down only because they think they should. Others understand the OPM game and put thier cash to better use.
Many people who have paid principal into their homes are losing it all anyway. With an interest only loan, they would be walking away from less out of pocket cash.
The more cash they put down, the more they will be walking away from.
August 25, 2007 at 10:32 PM #81149ParticipantWho said anything about a toxic loan ?
(There are actually plenty of high score borrowers that did get fooled into toxic loans)
100% financing was brilliant!
Mortgage interest is some of the cheapest money that you can get. There are people with high credit scores who financed 100% just because they could.Their cash is worth more to them than the rate on a 20% 2nd.
Many people put money down only because they think they should. Others understand the OPM game and put thier cash to better use.
Many people who have paid principal into their homes are losing it all anyway. With an interest only loan, they would be walking away from less out of pocket cash.
The more cash they put down, the more they will be walking away from.
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