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urbanrealtor
ParticipantJP:
Perhaps I need to see what you are seeing.What areas are you seeing examples of what you describe and what is your definition of stealth inventory.
A lot of stuff that registers as non-paying is in the middle of HUD-sponsored mods.
I have encountered this several times when mining the NOD’s.
It is pretty unlikely that these ones (again I don’t have numbers on how many) will end up as REOs.
I have seen numbers that suggest consumer debt has slowed or decreased.
(eg: http://www.thefreelibrary.com/+THE+GREAT+ADJUSTMENT+IS+WELL+UNDER+WAY-a01611840309)At an anecdotal level, I am seeing only certain restaurants increase in business.
Specifically those with much lower prices.
I don’t see a lot of people wasting discretionary income but maybe I need to see where you are experiencing this.
Participant[quote=patientrenter]urbanrealtor, I would lend less to someone who had irregular income than someone with regular income. Isn’t that the way it should be?
In your example, you say that the person newly classified as self-employed had difficulty qualifying for an 80% loan. I assume you meant in Calif – meaning it was a no-recourse loan. That we have arrived at a situation where people are surprised that higher-risk borrowers can’t borrow 80%, w/o recourse, of the price of their home purchase is just an indicator of how irrational the home lending market has been allowed to become.
If they asked for a 50% loan, would they be denied? If so, that means to me that the home lending market has lost its center. A 50% loan is probably so unusual that there are no standard ways to underwrite it. That’s what is wrong with this market. If the people approving the loans were responsible for the losses on non-repayment of the loans, then we’d have lots of good product for higher-risk borrowers as well as others. But the downpayments would be where they should be – much higher than today, and higher for higher-risk borrowers than for others.[/quote]
You are correct.
Higher-risk borrowers should have harder times getting loans.
My post was not primarily a normative suggestion but to point out that there are requirements for those who cannot point to years of stable income that are different from those who can.Recourse is largely irrelevant as recourse on purchase money defaults is seldom (as a percentage of defaults) pursued by lenders regardless of which state the property is in.
My normative comments are that sometimes definitions of income stability seem counterintuitive and that the definition of self-employment is sometimes counterintuitive. While I certainly endorse conservative lending standards, I sometimes question the logic of those who establish the risk management models for underwriting these instruments.
I think that questionable logic is only slightly less prevalent today than it was in 2005. The difference today is that banks are less concerned about market share and generally more gun shy.
Participant[quote=patientrenter]urbanrealtor, I would lend less to someone who had irregular income than someone with regular income. Isn’t that the way it should be?
In your example, you say that the person newly classified as self-employed had difficulty qualifying for an 80% loan. I assume you meant in Calif – meaning it was a no-recourse loan. That we have arrived at a situation where people are surprised that higher-risk borrowers can’t borrow 80%, w/o recourse, of the price of their home purchase is just an indicator of how irrational the home lending market has been allowed to become.
If they asked for a 50% loan, would they be denied? If so, that means to me that the home lending market has lost its center. A 50% loan is probably so unusual that there are no standard ways to underwrite it. That’s what is wrong with this market. If the people approving the loans were responsible for the losses on non-repayment of the loans, then we’d have lots of good product for higher-risk borrowers as well as others. But the downpayments would be where they should be – much higher than today, and higher for higher-risk borrowers than for others.[/quote]
You are correct.
Higher-risk borrowers should have harder times getting loans.
My post was not primarily a normative suggestion but to point out that there are requirements for those who cannot point to years of stable income that are different from those who can.Recourse is largely irrelevant as recourse on purchase money defaults is seldom (as a percentage of defaults) pursued by lenders regardless of which state the property is in.
My normative comments are that sometimes definitions of income stability seem counterintuitive and that the definition of self-employment is sometimes counterintuitive. While I certainly endorse conservative lending standards, I sometimes question the logic of those who establish the risk management models for underwriting these instruments.
I think that questionable logic is only slightly less prevalent today than it was in 2005. The difference today is that banks are less concerned about market share and generally more gun shy.
Participant[quote=patientrenter]urbanrealtor, I would lend less to someone who had irregular income than someone with regular income. Isn’t that the way it should be?
In your example, you say that the person newly classified as self-employed had difficulty qualifying for an 80% loan. I assume you meant in Calif – meaning it was a no-recourse loan. That we have arrived at a situation where people are surprised that higher-risk borrowers can’t borrow 80%, w/o recourse, of the price of their home purchase is just an indicator of how irrational the home lending market has been allowed to become.
If they asked for a 50% loan, would they be denied? If so, that means to me that the home lending market has lost its center. A 50% loan is probably so unusual that there are no standard ways to underwrite it. That’s what is wrong with this market. If the people approving the loans were responsible for the losses on non-repayment of the loans, then we’d have lots of good product for higher-risk borrowers as well as others. But the downpayments would be where they should be – much higher than today, and higher for higher-risk borrowers than for others.[/quote]
You are correct.
Higher-risk borrowers should have harder times getting loans.
My post was not primarily a normative suggestion but to point out that there are requirements for those who cannot point to years of stable income that are different from those who can.Recourse is largely irrelevant as recourse on purchase money defaults is seldom (as a percentage of defaults) pursued by lenders regardless of which state the property is in.
My normative comments are that sometimes definitions of income stability seem counterintuitive and that the definition of self-employment is sometimes counterintuitive. While I certainly endorse conservative lending standards, I sometimes question the logic of those who establish the risk management models for underwriting these instruments.
I think that questionable logic is only slightly less prevalent today than it was in 2005. The difference today is that banks are less concerned about market share and generally more gun shy.
Participant[quote=patientrenter]urbanrealtor, I would lend less to someone who had irregular income than someone with regular income. Isn’t that the way it should be?
In your example, you say that the person newly classified as self-employed had difficulty qualifying for an 80% loan. I assume you meant in Calif – meaning it was a no-recourse loan. That we have arrived at a situation where people are surprised that higher-risk borrowers can’t borrow 80%, w/o recourse, of the price of their home purchase is just an indicator of how irrational the home lending market has been allowed to become.
If they asked for a 50% loan, would they be denied? If so, that means to me that the home lending market has lost its center. A 50% loan is probably so unusual that there are no standard ways to underwrite it. That’s what is wrong with this market. If the people approving the loans were responsible for the losses on non-repayment of the loans, then we’d have lots of good product for higher-risk borrowers as well as others. But the downpayments would be where they should be – much higher than today, and higher for higher-risk borrowers than for others.[/quote]
You are correct.
Higher-risk borrowers should have harder times getting loans.
My post was not primarily a normative suggestion but to point out that there are requirements for those who cannot point to years of stable income that are different from those who can.Recourse is largely irrelevant as recourse on purchase money defaults is seldom (as a percentage of defaults) pursued by lenders regardless of which state the property is in.
My normative comments are that sometimes definitions of income stability seem counterintuitive and that the definition of self-employment is sometimes counterintuitive. While I certainly endorse conservative lending standards, I sometimes question the logic of those who establish the risk management models for underwriting these instruments.
I think that questionable logic is only slightly less prevalent today than it was in 2005. The difference today is that banks are less concerned about market share and generally more gun shy.
Participant[quote=patientrenter]urbanrealtor, I would lend less to someone who had irregular income than someone with regular income. Isn’t that the way it should be?
In your example, you say that the person newly classified as self-employed had difficulty qualifying for an 80% loan. I assume you meant in Calif – meaning it was a no-recourse loan. That we have arrived at a situation where people are surprised that higher-risk borrowers can’t borrow 80%, w/o recourse, of the price of their home purchase is just an indicator of how irrational the home lending market has been allowed to become.
If they asked for a 50% loan, would they be denied? If so, that means to me that the home lending market has lost its center. A 50% loan is probably so unusual that there are no standard ways to underwrite it. That’s what is wrong with this market. If the people approving the loans were responsible for the losses on non-repayment of the loans, then we’d have lots of good product for higher-risk borrowers as well as others. But the downpayments would be where they should be – much higher than today, and higher for higher-risk borrowers than for others.[/quote]
You are correct.
Higher-risk borrowers should have harder times getting loans.
My post was not primarily a normative suggestion but to point out that there are requirements for those who cannot point to years of stable income that are different from those who can.Recourse is largely irrelevant as recourse on purchase money defaults is seldom (as a percentage of defaults) pursued by lenders regardless of which state the property is in.
My normative comments are that sometimes definitions of income stability seem counterintuitive and that the definition of self-employment is sometimes counterintuitive. While I certainly endorse conservative lending standards, I sometimes question the logic of those who establish the risk management models for underwriting these instruments.
I think that questionable logic is only slightly less prevalent today than it was in 2005. The difference today is that banks are less concerned about market share and generally more gun shy.
ParticipantFair enough SD>
However, I am up close and personal with lots of REOs in my neighborhood.I would say 9 times out of 10 the properties are trashed out and re-keyed within 2 weeks.
Usually they are back on the market within 2 weeks after that.
There are exceptions but they are rare.
I live in an area with LOTS of reos.
To me this delay can be accounted for just by administrative process.
Are you seeing something different?
ParticipantFair enough SD>
However, I am up close and personal with lots of REOs in my neighborhood.I would say 9 times out of 10 the properties are trashed out and re-keyed within 2 weeks.
Usually they are back on the market within 2 weeks after that.
There are exceptions but they are rare.
I live in an area with LOTS of reos.
To me this delay can be accounted for just by administrative process.
Are you seeing something different?
ParticipantFair enough SD>
However, I am up close and personal with lots of REOs in my neighborhood.I would say 9 times out of 10 the properties are trashed out and re-keyed within 2 weeks.
Usually they are back on the market within 2 weeks after that.
There are exceptions but they are rare.
I live in an area with LOTS of reos.
To me this delay can be accounted for just by administrative process.
Are you seeing something different?
ParticipantFair enough SD>
However, I am up close and personal with lots of REOs in my neighborhood.I would say 9 times out of 10 the properties are trashed out and re-keyed within 2 weeks.
Usually they are back on the market within 2 weeks after that.
There are exceptions but they are rare.
I live in an area with LOTS of reos.
To me this delay can be accounted for just by administrative process.
Are you seeing something different?
ParticipantFair enough SD>
However, I am up close and personal with lots of REOs in my neighborhood.I would say 9 times out of 10 the properties are trashed out and re-keyed within 2 weeks.
Usually they are back on the market within 2 weeks after that.
There are exceptions but they are rare.
I live in an area with LOTS of reos.
To me this delay can be accounted for just by administrative process.
Are you seeing something different?
ParticipantActually, since 1099 income is considered significantly less reliable than w2 income, there is something different.
I am not a terribly high volume agent but I generally close more than one deal per month (it will be like 10-12 by June).
Currently, because business is slow, I am the top producer in my (rather small) office.
The next producer is our loan officer.
She has informed me that neither of us currently qualify for any sort of lending.
While we find this funny (and understandable, c’mon we work in real estate) it really means that a lot of people who should get loans or refi’s cannot.
Here is an example:
I have two clients (a couple) who just closed on a purchase.
The guy clears more than $175k (as a W-2 employee) from the business he is a partner in.
The girlfriend is a department manager for a manufacturing firm and makes noticeably less.The boyfriend had to be pulled from the loan app because the company change its entity vesting a couple years ago (from an llc to a corp) and therefore the bank sees him as self employed.
He did not qualify for an 80% conventional conforming loan despite his boatload of income and greater boatload of assets.
Thankfully, the girlfriend’s bonus was enough to qualify by herself.
Bottomline, there are programs (of which I am sure HLS is well-versed) but it is really tougher than one might guess for those who are their own boss.
ParticipantActually, since 1099 income is considered significantly less reliable than w2 income, there is something different.
I am not a terribly high volume agent but I generally close more than one deal per month (it will be like 10-12 by June).
Currently, because business is slow, I am the top producer in my (rather small) office.
The next producer is our loan officer.
She has informed me that neither of us currently qualify for any sort of lending.
While we find this funny (and understandable, c’mon we work in real estate) it really means that a lot of people who should get loans or refi’s cannot.
Here is an example:
I have two clients (a couple) who just closed on a purchase.
The guy clears more than $175k (as a W-2 employee) from the business he is a partner in.
The girlfriend is a department manager for a manufacturing firm and makes noticeably less.The boyfriend had to be pulled from the loan app because the company change its entity vesting a couple years ago (from an llc to a corp) and therefore the bank sees him as self employed.
He did not qualify for an 80% conventional conforming loan despite his boatload of income and greater boatload of assets.
Thankfully, the girlfriend’s bonus was enough to qualify by herself.
Bottomline, there are programs (of which I am sure HLS is well-versed) but it is really tougher than one might guess for those who are their own boss.
ParticipantActually, since 1099 income is considered significantly less reliable than w2 income, there is something different.
I am not a terribly high volume agent but I generally close more than one deal per month (it will be like 10-12 by June).
Currently, because business is slow, I am the top producer in my (rather small) office.
The next producer is our loan officer.
She has informed me that neither of us currently qualify for any sort of lending.
While we find this funny (and understandable, c’mon we work in real estate) it really means that a lot of people who should get loans or refi’s cannot.
Here is an example:
I have two clients (a couple) who just closed on a purchase.
The guy clears more than $175k (as a W-2 employee) from the business he is a partner in.
The girlfriend is a department manager for a manufacturing firm and makes noticeably less.The boyfriend had to be pulled from the loan app because the company change its entity vesting a couple years ago (from an llc to a corp) and therefore the bank sees him as self employed.
He did not qualify for an 80% conventional conforming loan despite his boatload of income and greater boatload of assets.
Thankfully, the girlfriend’s bonus was enough to qualify by herself.
Bottomline, there are programs (of which I am sure HLS is well-versed) but it is really tougher than one might guess for those who are their own boss.
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