Posted on 05/29/2024 9:06:16 AM PDT by Kaiser8408a
From Mike Shedlock (Mish).
It’s a perfect time to do something really stupid, like offering zero percent down payments on mortgages.
Case-Shiller national and 10-city indexes via St. Louis Fed, OER, CPI, and Rent from the BLS Perfectly Stupid Timing
Morningstar reports One of the Biggest U.S. Lenders is Offering 0%-Down-Payment Mortgages for First-Time Home Buyers.
Home buyers will be able to buy a home without putting any money down under a new program launched by United Wholesale Mortgage, one of the largest U.S. mortgage lenders.
The Pontiac, Mich.-based company’s new program will be available to first-time home buyers and people earning at or below 80% of an area’s median income, the company said in a press release.
UWM (UWMC) will give eligible buyers a second-lien loan of up to $15,000, in the form of down-payment assistance, for 3% of the home’s purchase price. The loan will not accrue interest or require a monthly payment.
“Homeownership is something we’re very passionate about,” Melinda Wilner, chief operating officer at UWM, told MarketWatch.
The company had previously allowed buyers to put down as little as 1% on their homes, but it wanted to go further to help home buyers, she said. The lender is anticipating a higher volume of borrowers with its new zero-down program, Wilner added.
Poor underwriting practices were a key driver of the subprime-mortgage crisis in the U.S., the International Monetary Fund wrote in 2008. But unlike the low- and no-down-payment loans that proliferated during that time – when lenders made loans to people who eventually were unable to pay them and lost their homes – UWM’s program is different, Wilner said.
My own personal comments: Will UWM be retaining these loans on their balanace sheet? Or simply resellling them to Fannie Mae, Freddie Mac? Likely the latter.
(Excerpt) Read more at confoundedinterest.net ...
It can help reset house prices when the stop paying. I can pick up some cheap real estate :-)
Didn’t we already play this game a few years back?
That way you can avoid PMI.
At least that's what the scumbags did before the collapse in 2008.
My own personal comments: Will UWM be retaining these loans on their balanace sheet? Or simply resellling them to Fannie Mae, Freddie Mac? Likely the latter.
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As a retired mortgage banker, I can tell you the government will make these lenders whole if need be.
They’ll all be underwater within a year if not sooner.
Only a friendly unsecured loan from a friend or relative can allow you to do that.
Mortgage underwriters will know if a down payment loan is made by another financial institution.
How long until we have NINJA loans for illegal immigrants with no jobs? NINJA = No Income, No Job or Assets.
NOBODY and I mean NOBODY will be buying that CDO/Debt.
This will be a short lived program.
Very short.
“I can pick up some cheap real estate”
I hope you’ve budgeted in for major repair costs......I’m sure the properties will be less than pristine once vacated.
Somehow they got away with it. I believe it was about the timing of when the 20% loan was issued.
So, people more likely to be able to pay off a loan are offered no relief.
Aimed at illegals. Cheered by the left as the American way! In a few years feds will sue the banks saying they engaged in predatory lending.
Big banks left the wholesale mortgage business in 2009, leaving it to companies like United Wholesale and Rocket Mortgage. They have a network of brokers out in the USA, bringing home-buyers/customers in. They package the loans, and then sell them off.
A sign of zero-down mortgages means, once again, some investors are getting greedy for higher yields offered by these “zero-down” loans, which are typically made to the worst credit risk home buyers. There also is a Gov’t incentive angle, with Gov’t encouraging loans in “underserved” areas (yes, once again)
its a sign the top is closes
If you thought house prices were expensive before..
Wait until people hear about FREE HOUSES!
I wonder, what % will put $0 down. and then not pay the mortgage from day 1 or 60?
Then it will take the bank a year+ to evict. and then have to resell.
Yup! I think it was intentional then too
“ Poor underwriting practices were a key driver of the subprime-mortgage crisis in the U.S., the International Monetary Fund wrote in 2008. ”
No, that would be credit default swaps and fraudulently listing crap mortgages listed as grade A because they were bundled. But the old fable remains that it was caused by low quality people taking loans.
The effect of that is to pretend that the banks and insuring agencies were scammed by these low rent ghetto people, and not vice versa.
The buyers of the “mortgage-backed” securities were scammed by nearly all involved.
In some areas PITI would be far less than rent, ensuring some stability.
But if a major repair is needed before equity is attained, mortgagors are likely to walk away.
If enough walk away, an area can become destabilized. Think Detroit! Think!
I live in Middle Tennessee and I’ve seen a new subdivision being built nearby that advertises they can get you into a new house for $100, I assume that is down payment, I maybe wrong but I wouldn’t doubt it.
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