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(article) lender proposing a reduction in mortgage standards


centex
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https://www.marketwatch.com/story/ex-citimortgage-ceo-3-things-i-learned-from-the-2008-great-financial-crisis-2018-09-17?siteid=rss&rss=1

 

This does not bode well...the LAST thing we need is reduced standards simply because not enough people are applying right now. 

 

IMO, the drop in apps would tend to suggest that we are at a saturation point of QUALIFIED applicants.  Some people just are not meant to be in a mortgage at this precise moment in time. 

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I think (for whatever it's worth) that reducing the lending standards is a terrible idea. I graduated from undergrad in spring of 2009 with a BBA in real estate. The models we were shown in my real estate finance class were appalling. 

 

I have to wonder how much of the decline in mortgage apps/loans are due to the dramatic differences in wages and home prices for first time home buyers as compared to previous generations. When adjusted for inflation, the cost of living, home prices, and education costs are higher, while wages are lower. Something has to give and home ownership is probably part of that. 

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Subprime FHA loans never went away.

 

I found this astonishing.  

 

Even with FHA's low credit standards and almost no down payment requirements, some people still can't get the deal done.  The group of people with FHA loans who used seller-funded down payment assistance has a serious delinquency rate over 14%.  :swoon: 

 

Source

 

cy03yRE.png

 

 

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2 hours ago, cv91915 said:

Subprime FHA loans never went away.

 

I found this astonishing.  

 

Even with FHA's low credit standards and almost no down payment requirements, some people still can't get the deal done.  The group of people with FHA loans who used seller-funded down payment assistance has a serious delinquency rate over 14%.  :swoon: 

 

Source

 

cy03yRE.png

 

 

And...the group with NO down payment assistance had the lowest rate.  Imagine that...who woulda thunk.

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1 hour ago, centex said:

And...the group with NO down payment assistance had the lowest rate.  Imagine that...who woulda thunk.

Makes sense that the people who didn't need down payment assistance were better prepared (relatively speaking) for a mortgage. 

 

The default rate on FHA loans in general is really high, which is why they're so expensive.  I've never figured out how extending risky, expensive financing for housing is generally regarded as helpful.  For many an FHA loan is just a payday loan with a lien attached.

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I found out about a new mortgage finance program for self employed individuals lately that relies on bank statements as the basis for repayment consideration.

 

1 year needed of personal, or 2 years if supplying biz. 

 

I personally think it's great.  Allows me to max out tax advantages on S Corp/C Corp for depreciating tooling/machinery, writing off stale inventory, etc etc

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13 hours ago, cv91915 said:

Makes sense that the people who didn't need down payment assistance were better prepared (relatively speaking) for a mortgage. 

 

The default rate on FHA loans in general is really high, which is why they're so expensive.  I've never figured out how extending risky, expensive financing for housing is generally regarded as helpful.  For many an FHA loan is just a payday loan with a lien attached.

I have an answer for this but its against the ToS to bring it up.

 

Also, note how the smaller the mortgage the higher the DQ rate. And then see the corresponding entry for "manufactured homes" ie trailers.

Trailer park people are going to be trailer park people.

Edited by IndyPoolPlayer
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On 9/21/2018 at 6:12 PM, Konrad2012 said:

I found out about a new mortgage finance program for self employed individuals lately that relies on bank statements as the basis for repayment consideration.

 

1 year needed of personal, or 2 years if supplying biz. 

 

I personally think it's great.  Allows me to max out tax advantages on S Corp/C Corp for depreciating tooling/machinery, writing off stale inventory, etc etc

As a heads up, there are also 1 year business bank statement, 1 month bank statement, Verification Of Employment (VOE) only, qualify with ability to do asset depletion, qualify with liquid asset reserves sufficient to repay loan in full, etc. loans available.

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