Zero Down Mortgages Restarted by the Biggest Subprime Lender in Town - Fannie

The Market Oracle ^ | Sep 12, 2010 | Trader_Mark

[An Old Man]

Good news folks... the "no skin in the game" mortgage is back. You know the game right? It's a one sided bet where the buyer can only win. If the house goes up, you pocket that and hopefully get that granite countertop you so deserve with the home equity. If it doesn't go up.... you walk - but only after living in the home rent free for at least 18-22 months as you strategically default your way to a mountain of savings while waiting for the sheriff to show up. If you are smart you can save at least $30K during this time. There are no losers here (except the U.S. taxpayer). [Jan 5, 2010: WSJ - The Treasury Department's Christmas Eve

I could go on and on and on (and on) but let me save my breath - my warnings in late 07 and early 08 about Fanfredron (fannie + freddie + enron) went on deaf ears, so instead I'll clap and say good on you folks. Buying a $115K house for 67 cents is something our foreign readers must only cry in agony they have no opportunity to do. Those darn French and Germans still have to pay 20% down (snicker).

Can you see the 3 AM informercial now?

"For less than the price of a candy bar, you too can be a home 'owner'. Only in America!"

Next step as we wind our way through the Ponzi Matrix? When the government pays YOU to buy the home.

1. When the housing bubble burst, one of the culprits, economists agreed, was exotic mortgages, including those that required little or no money down. But on a recent evening, Matthew and Hannah Middlebrooke stood in their new $115,000 three-bedroom ranch house here, which Mr. Middlebrooke bought in June with just $1,000 down. (well at least he had $1000 saved)

2. Because he also received a grant to cover closing costs and insurance, the check he wrote at the closing was for 67 cents. (well at least he had 67 cents saved) “I thought I’d be stuck renting for years,” said Mr. Middlebrooke, 26, who earns $32,000 a year as a producer for a Christian television ministry.

3. Although home foreclosures are again expected to top two million this year, Fannie Mae, the lending giant that required a government takeover, is creeping back into the market for mortgages with no down payment.

4. Mr. Middlebrooke’s mortgage came from a new program called Affordable Advantage, available to first-time home buyers in four states and created in conjunction with the states’ housing finance agencies.

5. Some experts are concerned about the revival of such mortgages. “Loans that have zero down payment perform worse than loans with down payments,” said Mathew Scire, a director of the Government Accountability Office’s financial markets and community investment team. “And loans with down payment assistance” — like Mr. Middlebrooke’s — “perform worse than those that do not.” (you and your... your... facts!)

6. “This is subprime lending done right,” said John Taylor, president of the National Community Reinvestment Coalition, an umbrella group for 600 community organizations, and a staunch critic of the lending industry. “If they had done subprime this way in the first place, we wouldn’t have these problems.” (yeh! Wait, I thought people who could not even save 3% down used to be called renters? Nevermind - that's old school)

7. The loans are 30-year fixed mortgages, with mandatory homeownership counseling, available to people with credit scores of 680 and above (720 in Massachusetts). The buyers have to put in $1,000 and must live in the homes. After six months, there are no delinquencies so far, said Kate Venne, a spokeswoman for the agency. (whew, made it through 6 months.... coast is clear)

8. The agencies buy the loans from lenders, then sell them as securities to Fannie Mae. Because the government now owns 80 percent of Fannie Mae, taxpayers are on the hook if the loans go bad.

[An Old Man]

Just in case you didn't have a chance to play the game the last time around, pay attention to the commercial so that you will not get lost in the shuffle.

Good luck in your endevor to spend yaor way out of this one!

Does this post need one of these? /s

[Texas Eagle]

Okay. This time when home prices skyrocket, I'm going to sell when our house hits 500,000.

I'm not going to miss out twice.

[An Old Man]

There ain't gonna be no skyrocketing prices this time!

did you forget the /s ?

[jiggyboy]

Yeah but that will be a hyperinflation price next time. $500,000 in your pocket will be just the 10% down payment on a 30-year-old tract home in a “diverse” neighborhood.

[Venturer]

Whyu should anything change.

We still have the same bunch running things, there was no investigation, no one fired, Why change?

[Benchim]

barney fran k and Cris Dodd ruined our country with these loans to people who couldn’t pay.

[concerned about politics]

Because the government now owns 80 percent of Fannie Mae, taxpayers are on the hook if the loans go bad.

The government shares should be sold off to the private market. If they survive, they're a viable company. If not, they weren't meant to be anyway.

The tax payers should never be held responsible for the failures of others. They're innocent bystanders.

[Mariner]

Soon they will be offering Mortgages for those who are not delinquent and can "squeeze in" another payment for a second home. No money down. Lender-paid closing costs.

Now's the time to buy! ya know...

[blam]

"Barney Frank and Cris Dodd ruined our country with these loans to people who couldn’t pay."

Hey...we didn't revolt so they'll keep doing it.

BTW, welcome to Free Republic.