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If the media wants to scare the shit out of ppl concerning mortgage lending standards tightening. Please also tell them if ppl don’t abuse the forebearance system this doesn’t have to be a meltdown. Lots of ppl citing $JPM announcement. But that announcement seemed
incomplete or at least the article did. Seemed like it was only referring to conventional loans. Sure you could ask for 20% down and 700 FHA but you’d still have MIP monthly and the funding fee. So are they not doing any government loans anymore? No #VA, #FHA or #USDA?
It said their 3% down loan was still available. WTF sense does that make? You’ll do 3% down but not 15% down?
I’m sure it’s their version of home ready or home possible loans but once again. Why? If you don’t want a 15% down loan with 12% PMI coverage when they fuck do you want a 3% down loan with 25% coverage? (HR&HP offer reduced PMI)
You’re looking at 72/73% investor coverage in a
You’re looking at 72/73% investor coverage in a
foreclosure. Lenders look at this as what if they foreclose day 1 and they assume they’ll recover 75% of its original value after everything is said and done.
Well that shit goes right out the window with forebearance. Now it’s all about reserves and investment.
Well that shit goes right out the window with forebearance. Now it’s all about reserves and investment.
So everyone thinks the boomers will fall out of their houses and start selling into a recession. Doubtful. It won’t be the median home prices that get hit hard. It’ll be the high and low priced areas first. Higher priced, (10 x AMI and low priced 1-3 x AMI). Here
that’s houses over 660k and under 200k. Why? Well it’s who buys them. Many are the same ppl buying rentals. They’ll have a lot of exposure to service workers who have a harder time qualifying for loans since their income usually varies. In those same areas
you got a ton of federal money that gave first time buyers 15,000 toward down payment AND CLOSING COSTS. They were offered through the states and call the hardest hit fund. It was designed to bolster housing in areas that hadn’t recovered since GFC. In TN the 15k goes away
after 10 years. Many of these were competing directly with investors for lower end housing. So, agents would take that 15k and offer to pay all closing costs etc. (no matter how much I told them not to). Don’t do a 105 LTV loan you CANNOT refinance due to the second lien. It
will have to be cash out and they won’t resubordinate the lien/15k grant either. If you sell or refi it has to be paid back.
This is where I think you’ll see the cracks start to form first.
I beg ppl not to do zero down loans (sans VA, USDA). Even a 3-5% down loan
This is where I think you’ll see the cracks start to form first.
I beg ppl not to do zero down loans (sans VA, USDA). Even a 3-5% down loan
you can’t sell that house for at least a year. In a good market. I usually estimate a seller will pay 7% in fees to be safe. So if you put 3% down & real estate dips or is flat. You can’t sell, maybe able to refi but you’ll probably go negative LTV. That’s bad.
That means you’re under water. That will be when we see waves of foreclosures. Hopefully we don’t get there. The more pressing issue is who the fuck will want to buy mortgage bonds when there’s no guarantee of repayment? I try to explain this as often as possible.
Your mortgage isn’t that important individually. What is important is investor faith that payments will be made no matter what. If we see huge forebearance numbers we will see the fed as the only buyer and they’ll likely have to seek out servicers and figure out a way
to indemnify them in the future because I guaran-fucking-tee you they want no part of this shit again. They may not even want to do QM loans anymore. Just have their own book and their own guidelines. Like, will not lend to anyone who entered forebearance in previous 36 months.
This is how extreme the forebearance measures are in comparison to existing lending guidelines. Conv 2 lates in 12 months automatically disqualifies you. The servicer on Conv has to pay the investor regardless and the person administering this doesn’t seem to have any idea
That his actions (head of FHFA) have the potential to permanently devalue mortgage bonds. I wrote a post a while back that strong performance of $MBS during this crises could revalue bonds to pre-GFC values. Well, that dream died pretty damn fast. We didn’t even give ppl a
Chance to try to pay before we rolled out a half baked plan to assist ppl. Which we should assist ppl. They didn’t go out and snort a bunch of covid at a party and pawn their tv to buy more but carte blanche is as bad an idea here as it is on student loans.
