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patientrenter
ParticipantRustico: “…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?
Patient renter in OC
ParticipantRustico: “…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?
Patient renter in OC
ParticipantRustico: “…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?
Patient renter in OC
ParticipantRustico: “Why does the o.p. need “low initial payments” on a house they can afford?”
Using my (extremely conservative personal) standards for affordability, they wouldn’t need a low initial payment loan at all, even if interest rates were 20%. But I recognize others have more normal affordability standards. If interest rates went back to 15%, and house prices plummeted, I wouldn’t have any problem advising a young person on their way up to stretch a little for a more expensive property (by a little, maybe 10-25% more). They could then either live on rice and beans for 5 or 10 years, or take on a loan with initial payments for that period that are a little lower than a level payment loan, maybe 5-15% less for 5 years.
Patient renter in OC
ParticipantRustico: “Why does the o.p. need “low initial payments” on a house they can afford?”
Using my (extremely conservative personal) standards for affordability, they wouldn’t need a low initial payment loan at all, even if interest rates were 20%. But I recognize others have more normal affordability standards. If interest rates went back to 15%, and house prices plummeted, I wouldn’t have any problem advising a young person on their way up to stretch a little for a more expensive property (by a little, maybe 10-25% more). They could then either live on rice and beans for 5 or 10 years, or take on a loan with initial payments for that period that are a little lower than a level payment loan, maybe 5-15% less for 5 years.
Patient renter in OC
ParticipantRustico: “Why does the o.p. need “low initial payments” on a house they can afford?”
Using my (extremely conservative personal) standards for affordability, they wouldn’t need a low initial payment loan at all, even if interest rates were 20%. But I recognize others have more normal affordability standards. If interest rates went back to 15%, and house prices plummeted, I wouldn’t have any problem advising a young person on their way up to stretch a little for a more expensive property (by a little, maybe 10-25% more). They could then either live on rice and beans for 5 or 10 years, or take on a loan with initial payments for that period that are a little lower than a level payment loan, maybe 5-15% less for 5 years.
Patient renter in OC
ParticipantRustico: “Why does the o.p. need “low initial payments” on a house they can afford?”
Using my (extremely conservative personal) standards for affordability, they wouldn’t need a low initial payment loan at all, even if interest rates were 20%. But I recognize others have more normal affordability standards. If interest rates went back to 15%, and house prices plummeted, I wouldn’t have any problem advising a young person on their way up to stretch a little for a more expensive property (by a little, maybe 10-25% more). They could then either live on rice and beans for 5 or 10 years, or take on a loan with initial payments for that period that are a little lower than a level payment loan, maybe 5-15% less for 5 years.
Patient renter in OC
ParticipantRustico: “Why does the o.p. need “low initial payments” on a house they can afford?”
Using my (extremely conservative personal) standards for affordability, they wouldn’t need a low initial payment loan at all, even if interest rates were 20%. But I recognize others have more normal affordability standards. If interest rates went back to 15%, and house prices plummeted, I wouldn’t have any problem advising a young person on their way up to stretch a little for a more expensive property (by a little, maybe 10-25% more). They could then either live on rice and beans for 5 or 10 years, or take on a loan with initial payments for that period that are a little lower than a level payment loan, maybe 5-15% less for 5 years.
Patient renter in OC
Participant“i’m thinking there’s more to it than that. i recall self employed people have always had more trouble getting loans than employees. might have to do with the kind of jobs he does, consistency of income on a yearly basis, plain old crappy accounting… and possibly fudging of numbers…”
drunkle, the caller apparently said that they “needed” a stated income loan. Surely that means only one thing: That they are cheating, or planning to cheat, on either their taxes or a lender. If they had difficulty convincing a lender to give them $1 million to buy a house because their self-employed income was not steady, then why would “stating” a higher income than they actually made make their repayment of the loan any more secure?
If I were a lender, I’d want to know as much as possible about a borrower in order to make the most accurate assessment of the risk of future nonpayment. Getting less information just means that I have to charge more than I should for the better risks, and less than I should for the worse risks. If these people think they’d benefit from this, then clearly they must be bad risks. Or they are cheating on their taxes.
Patient renter in OC
Participant“i’m thinking there’s more to it than that. i recall self employed people have always had more trouble getting loans than employees. might have to do with the kind of jobs he does, consistency of income on a yearly basis, plain old crappy accounting… and possibly fudging of numbers…”
drunkle, the caller apparently said that they “needed” a stated income loan. Surely that means only one thing: That they are cheating, or planning to cheat, on either their taxes or a lender. If they had difficulty convincing a lender to give them $1 million to buy a house because their self-employed income was not steady, then why would “stating” a higher income than they actually made make their repayment of the loan any more secure?
If I were a lender, I’d want to know as much as possible about a borrower in order to make the most accurate assessment of the risk of future nonpayment. Getting less information just means that I have to charge more than I should for the better risks, and less than I should for the worse risks. If these people think they’d benefit from this, then clearly they must be bad risks. Or they are cheating on their taxes.
Patient renter in OC
Participant“i’m thinking there’s more to it than that. i recall self employed people have always had more trouble getting loans than employees. might have to do with the kind of jobs he does, consistency of income on a yearly basis, plain old crappy accounting… and possibly fudging of numbers…”
drunkle, the caller apparently said that they “needed” a stated income loan. Surely that means only one thing: That they are cheating, or planning to cheat, on either their taxes or a lender. If they had difficulty convincing a lender to give them $1 million to buy a house because their self-employed income was not steady, then why would “stating” a higher income than they actually made make their repayment of the loan any more secure?
If I were a lender, I’d want to know as much as possible about a borrower in order to make the most accurate assessment of the risk of future nonpayment. Getting less information just means that I have to charge more than I should for the better risks, and less than I should for the worse risks. If these people think they’d benefit from this, then clearly they must be bad risks. Or they are cheating on their taxes.
Patient renter in OC
Participant“i’m thinking there’s more to it than that. i recall self employed people have always had more trouble getting loans than employees. might have to do with the kind of jobs he does, consistency of income on a yearly basis, plain old crappy accounting… and possibly fudging of numbers…”
drunkle, the caller apparently said that they “needed” a stated income loan. Surely that means only one thing: That they are cheating, or planning to cheat, on either their taxes or a lender. If they had difficulty convincing a lender to give them $1 million to buy a house because their self-employed income was not steady, then why would “stating” a higher income than they actually made make their repayment of the loan any more secure?
If I were a lender, I’d want to know as much as possible about a borrower in order to make the most accurate assessment of the risk of future nonpayment. Getting less information just means that I have to charge more than I should for the better risks, and less than I should for the worse risks. If these people think they’d benefit from this, then clearly they must be bad risks. Or they are cheating on their taxes.
Patient renter in OC
Participant“i’m thinking there’s more to it than that. i recall self employed people have always had more trouble getting loans than employees. might have to do with the kind of jobs he does, consistency of income on a yearly basis, plain old crappy accounting… and possibly fudging of numbers…”
drunkle, the caller apparently said that they “needed” a stated income loan. Surely that means only one thing: That they are cheating, or planning to cheat, on either their taxes or a lender. If they had difficulty convincing a lender to give them $1 million to buy a house because their self-employed income was not steady, then why would “stating” a higher income than they actually made make their repayment of the loan any more secure?
If I were a lender, I’d want to know as much as possible about a borrower in order to make the most accurate assessment of the risk of future nonpayment. Getting less information just means that I have to charge more than I should for the better risks, and less than I should for the worse risks. If these people think they’d benefit from this, then clearly they must be bad risks. Or they are cheating on their taxes.
Patient renter in OC
ParticipantIt is interesting how many Armageddon-believers post here, Chris. But there are also more middle-of-the-road types, such as sdr, SDR, Rusty, and many more less vocal people.
Until a few years ago, I used to get frustrated with people who had extreme views that didn’t seem to be based on facts. Then I began to realize that they provided more opportunity for me to make money. Now I’m happy to see this behavior because I occasionally take advantage of it.
Patient renter in OC
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