| MZ DAIZY |
04-22-2023 01:32 PM |
Quote:
Originally Posted by vtec to vvel
(Post 4038443)
I agree with you on the number of foreclosures increasing. In fact, this was already the school of thought when homebuyers that didn't qualify before COVID qualified during COVID when rates dropped next to nothing.
BUT, even with these guidelines, they still have to qualify under the rules/regulations post-2008 housing crash, low-income or not, such as employment history, DTI ratio, cash needed to close, etc. They still have to undergo the underwriter's blessing and still have to meet ALL the requirements to get cleared to close. On a side note, there are plenty of people making 6 figures/year that still get denied due to their DTI ratio. So this new guideline in itself won't be the sole qualification standard, but in addition to.
Remember back then, the toxic mortgages/securities came about because the lack of rules/regulations. In fact, a very popular loan then was the "no documents" loan, where people go could into a bank and claim they made $10000000000/year and did not have to show proof of it. Mortgage lending itself was very loose then and anyone could virtually qualify then. Post-housing market crash, you so much as sneeze the wrong way, and the underwriter is re-auditing the loan file. Each time an Underwriter approves a loan, they are putting their license on the line, so if anything went wrong or seemed out of place, they would be the first to be questioned.
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<< Remember back then, the toxic mortgages/securities came about because the lack of rules/regulations. In fact, a very popular loan then was the "no documents" loan, where people go could into a bank and claim they made $10000000000/year and did not have to show proof of it. Mortgage lending itself was very loose then and anyone could virtually qualify then. >>
Not entirely true. I got a no doc back in 2000. Put $170,000 down on a $330,000 home and they still put me through the wringer.
I remember getting pissed and telling my Broker that they should HOPE I default on this mortgage. She said “they are not in the foreclosure business, they’re in the mortgage business”. I’ll always remember that!
The only thing I didn’t have to show was a tax return.
As it tuned out, no Docs are back (i just got one last year). My broker said they realized most of them in 2008 didn’t default. It was the clowns that put 10% down, made 4 or 5 payments and then refinanced (taking equity) due to the rising housing costs and then walking away.
Was a pretty good scam I know a bunch of people pulled. Buy a $300,000 house, put $30,000 down, wait a couple of months, refinance at a lower rate, take $90 to $100,000 back in equity, spend that money on cars and vacations, default on loan, lose their $30,000 and their house, but pocket $60 to $70,000. |
