Mortgage Lending Broker
As a mortgage broker I am at a loss to understand the U.S. home loan system?
in Australia you have to have 2 out of 3 following: income, equity (deposit), Good credit: and you need a really good explanation if you can not offer 3 out of 3, any involved in lending explain to me how it happened that banks that are willing to lend to Ninja's (no income no job no assets) which I really can not see any reason other than a quick buck to be made by bank and lender and hope to god you were not at the bottom of the pyramid when it all fell over. Was it really so easy to borrow money, or are we in other countries do not get the full story? Grannies, I think you are exactly righs the type of housing people are willing to settle for, I see it all the time
I am a realtor, not a lender, but from where I sat, yeah, the U.S. had some very "creative" ways to qualify borrowers. There were all kinds of loans available, including: Ninjas, but not really because borrowers needed to show some assets – like what is an asset? Ask lenders That made the loans. Oh yeah, they all took their money and ran. The 80-20 – it was virtually 103% + because so many borrowers rolled their closing costs, pre-paid in loans – and avoid PMI, so there was nothing to secure loans. Hybrid Arms – where the "marginal" borrowers (at best) were qualified based on the lower "teaser" the new "lower end" houses. And in case of new housing here (Austin, TX), property tax assessments based on "batch" value before home were built. So even though ARM rates were not adjusted (yet), the monthly payment went up $ 300 or more for property taxes were assessed on the value AFTER home were built. What about homeowners in areas with strong appreciation like CA & NV, which purchased for $ 40,000 and homes are now assessed for $ 400,000 + (as a friend of mine who owns a small condo in LA) who took out HELOCs and bought "investment" properties in lower price points? No PMI to secure these loans. And there were plenty of other ways to become a homeowner with no money out of pocket and overvalued real estate prices. Then there was the bundling of these very risky assets in mortgage bonds that were sold to investors worldwide. Yeah, some ugly business here. I think it started with de-regulation of lending practices and was helped along by Tech Bust (which started in 2000). Yes, it was really so easy to borrow money. Sigh.