Relevant:
2008-11-21 — businessweek.com
For generations, these loans, backed by the Federal Housing Administration, have offered working-class families a legitimate means to purchase their own homes. But now there's a severe danger that aggressive lenders and brokers schooled in the rash ways of the subprime industry will overwhelm the FHA with loans for people unlikely to make their payments. Exacerbating matters, FHA officials seem oblivious to what's happening -- or incapable of stopping it. They're giving mortgage firms licenses to dole out 100%-insured loans despite lender records blotted by state sanctions, bankruptcy filings, civil lawsuits, and even criminal convictions.
They're more right than they realize. What they don't mention in the story is the push to outright legalize 100% FHA loans (including seller-funded downpayment loans) with pricing characteristics very much like subprime.
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Comments:
luke at 16:27 2008-11-22 said:
The only way to truly stem the tide of predatory lending is similar to how one kills a pack of vampires. Take out their leader. In the case of subprime lending, the almighty dollar is king of the roost. Therefore, cap origination/junk fees and do away with Yield Spread Premiums. Tighten D/U and L/P standards, and those without 20% down must simply rent until they can save up enough capital to purchase a home. It is the American Dream, not the American Guarantee. PermalinkBIGTXLENDER at 23:20 2008-11-22 said:
Hi Luke,, I dont want to sound like a smart alec here, but THERE ARE NO SUBPRIME LOANS ANYMORE...so not sure how you can fix a loan that does not exist? My YSP rant: Brokers like me have to disclose it unless I use my Warehouse Line. I have never had One issue with it in my 8 yrs as a Broker. I have to make a living and 1 pt aint paying the bills. So my rate at 6% is paying <2> YSP, you call Wells Fargo Bank they quote you 6.25% so who is making more YSP?? Its sure not the Broker its.... drum roll the BANKS!!!! make way more than any Broker ever will. WE ALL USE THE SAME MONEY. DU and LP are as tight as can be right now, FHA is not the problem . FHA are ALWAYS FULL DOC LOANS WITH 2 YR AVERAGE OF ALL INCOME. Cant see how this a risk loan? Seller DPAP was good when it first started. When you stick to resale you are truly getting a market value. The buyer HAD TO TAKE A HOMEBUYER CLASS AND HAVE 1% IN TO THE DEAL. When the Production builders started luring customers with this. It was all fluff in value....THAT IS THE MAIN ISSUE. MAKING SURE VALUE IS GOOD anyway.. going to be a long hard road ahead... Permalinkadd a comment | go to forum thread
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