Uh oh? Zero down loans are back
- Thread starter paperboyNC
- Start date
sgip
Well-known member
Both people in the State of California who can qualify for these loans, Mr. Slim and Ms. None, are moving to Texas.
It's a grand example of good intentions (helping buyers) without understanding the market as well as turning a blind eye towards the unintended consequences of no down financing.
My .02c
It's a grand example of good intentions (helping buyers) without understanding the market as well as turning a blind eye towards the unintended consequences of no down financing.
My .02c
Perspective
Well-known member
Well, borrowers today must be qualified based upon their real provable income and the real fully-amortized payment. The Ability to Repay rule in Dodd-Frank requires such. Any lender who deviates from reasonable underwriting holds serious risk of the borrower suing if the borrower didn't have the ability to repay the loan at origination.
However, we have poorly educated and poorly informed voters, who chose Trump, who has vowed to repeal Dodd-Frank. Ain't it grand?
However, we have poorly educated and poorly informed voters, who chose Trump, who has vowed to repeal Dodd-Frank. Ain't it grand?
sgip
Well-known member
D/F exempts FHA from ratio limits. Some lenders still go into the 50's on FHA DTI. Repeal or not, what The Tang Menace does to the D/F law won't really impact this product significantly.
No seller is going to accept a 60 - 90 day escrow when the price of their house is so attractive.These deals are notoriously complex and often fail under their own weight.
Yes, some SFR's in the state will meet the terms of this combo loan, but for the most part, this is a FTHB Condo focused loan product. Now your available FHA approved condo inventory has shrunk the possible pool of homes for buyers even further.
Finally, once the buyer gets a good, long whiff of how high that payment is going to be relative to a low down Conventional loan product, the smart ones won't bite.Game, Set, and Match.
Nothing but wishful, misplaced intentions here.
My .02c
No seller is going to accept a 60 - 90 day escrow when the price of their house is so attractive.These deals are notoriously complex and often fail under their own weight.
Yes, some SFR's in the state will meet the terms of this combo loan, but for the most part, this is a FTHB Condo focused loan product. Now your available FHA approved condo inventory has shrunk the possible pool of homes for buyers even further.
Finally, once the buyer gets a good, long whiff of how high that payment is going to be relative to a low down Conventional loan product, the smart ones won't bite.Game, Set, and Match.
Nothing but wishful, misplaced intentions here.
My .02c
Perspective
Well-known member
Soylent Green Is People said:
Dodd-Frank gives the GSEs, FHA, and VA a grace period to comply with ATR, which should be ending fairly soon, if I remember correctly. And ATR is much more than just DTI limits.
Perspective
Well-known member
eyephone said:
The Democrats, HRC included, have been pleased with the effects of Dodd-Frank, but especially its ATR rule. Industry shills like Hensarling correctly complain that Dodd-Frank restricts lending. Um, that was the intent!
irvinetalker
New member
Soylent Green Is People said:
I agree: you would have to somehow have high enough income to afford the monthly payment (principal, interest, taxes, insurance, association dues) but low enough income to fit under the program income caps. That's why there were only 139 of these in two years in Orange County.
Perspective
Well-known member
irvinetalker said:
Such insignificant in numbers, that it's immaterial to this conversation, maybe?
sgip
Well-known member
Yes, the numbers are insignificant, but all in all it's a "camel's nose in the tent" discussion. The very last thing the industry needs is for someone to give them what they want. Low to No Down, Neg AM, NINJA financing is great for hedgies who are A) willing to take the risk, and B) are being handsomely rewarded by doing so. That kind of relaxing of regulations I wouldn't have a problem with. On the other hand I hope someone has the sense to keep D/F in place to reign in any FDIC insured bank who thinks going back to the 2005-2007 way of financing home purchases is a swell idea.
To hijack the thread, why don't Banks just stop focusing on income produced by mortgage loans and get President Trump to push through some common sense weed producer/seller banking law changes. That's where the money is.
My .02c
To hijack the thread, why don't Banks just stop focusing on income produced by mortgage loans and get President Trump to push through some common sense weed producer/seller banking law changes. That's where the money is.
My .02c
Perspective
Well-known member
That's the beauty of Dodd-Frank's ATR rule. Lenders are still completely free to make mortgages without verifying the borrower's income. They can make no income, no job, no assets mortgages today. They can even make those loans with teaser rates, interest-only terms, and/or even negative amortization.
ATR simply gives borrowers in these types of mortgages, the right to sue the lender, arguing the borrower never had the ability to repay the loan, within the first three years of the loan, or at any time during the loan's term if there's a default. That's it.
ATR simply gives borrowers in these types of mortgages, the right to sue the lender, arguing the borrower never had the ability to repay the loan, within the first three years of the loan, or at any time during the loan's term if there's a default. That's it.
Perspective
Well-known member
Maybe securitization is returning too?
Remember those risky subprime mortgage wagers? Something similar may return to the markethttp://www.denverpost.com/2017/01/2...s-something-similar-may-return-to-the-market/
Of course, bundling and parsing mortgages into pieces to make purchasing/investing more palatable is only dangerous to the extent the underlying instruments are quality products. NINJA neg-am loans were never quality products, regardless of securitization.
Remember those risky subprime mortgage wagers? Something similar may return to the markethttp://www.denverpost.com/2017/01/2...s-something-similar-may-return-to-the-market/
Of course, bundling and parsing mortgages into pieces to make purchasing/investing more palatable is only dangerous to the extent the underlying instruments are quality products. NINJA neg-am loans were never quality products, regardless of securitization.
irvinetalker
New member
Perspective said:
This mortgage-backed securities index looks to me more of a derivative of something that's already there. Securitization never went away. Roughly $130B of agency and another $4-5B of non-agency product are securitized and sold every month out of U.S. first mortgages. That's one reason Dodd-Frank discourages 2005-2007 craziness: you have to keep 5% of your securitization per the risk retention rule, excepting a pool made entirely of qualified mortgages (ability to repay demonstrated, etc.) or agency equivalent. Nobody wants to be the one keeping that much on their books, so bubble-style lending is discouraged.
Perspective
Well-known member
Anyone have a subscription to the WSJ to see this full article? Might be interesting, I mean, it's Fake News and all, because the only truth available is from Trump's mouth, but still...
Where House Flippers Can Get Financing
Traditional mortgage lenders and crowdfunding firms are increasingly willing to put up funds
By ROBYN A. FRIEDMAN
Feb. 1, 2017 11:13 a.m. ET
Until recently, home flippers?investors who buy houses to improve and resell for a quick profit?had few options for financing. Now, traditional lenders and crowdfunding firms are increasingly willing to put up the money.
https://www.wsj.com/articles/where-house-flippers-can-get-financing-1485965598
Where House Flippers Can Get Financing
Traditional mortgage lenders and crowdfunding firms are increasingly willing to put up funds
By ROBYN A. FRIEDMAN
Feb. 1, 2017 11:13 a.m. ET
Until recently, home flippers?investors who buy houses to improve and resell for a quick profit?had few options for financing. Now, traditional lenders and crowdfunding firms are increasingly willing to put up the money.
https://www.wsj.com/articles/where-house-flippers-can-get-financing-1485965598