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0% Down, 100% Chance of Trouble
As originally posted by Rick Sharga, ECP of Auction.com, on LinkedIn.com
We've seen this movie before, and if I recall correctly, it didn't end terribly well.
In fact, we're still living through the seemingly-endless backlog of delinquent loans and distressed properties that the massive housing boom and bust cycle left us with back in 2008. A cycle that was fueled by free-flowing capital, and built bad loan by bad loan by bad loan.
Imagine my surprise to read today about a new loan product that requires 0% down; has no private mortgage insurance requirement; provides cash from the lender for up to $4,500 of the closing costs, and allows gifts or seller funding for the rest of the closing costs; is aimed at borrowers making less than 80% of the median income in the market where they're buying a home; and available only for properties located in a low-to-moderate income census track.
Details from HousingWire here: http://www.housingwire.com/articles/33120-bbva-compass-launches-zero-per...
So, zero down payment loans to low-income borrowers with basically no cash reserves, on properties least likely to increase appreciably in value, and probably most likely in need of repairs.
What could possibly go wrong with this set-up?
I like the idea of helping people buy more homes, more easily, and more affordably. And I'd like to think that this lender is trying to do just that with its new program.
But having lived through the last cycle of zero-down loans to marginally-qualified borrowers, I know that what really happened was that people who just weren't financially ready for home ownership were put into homes they really couldn't afford, with predictably unpleasant results. In many cases, the resultant foreclosure - along with the financial meltdown that many of these borrowers experienced - has made their opportunity for home ownership - even in the future - extraordinarily unlikely.
We shouldn't be putting borrowers in a position of being one water heater leak away from a foreclosure. Not again.
Let's hope that history doesn't repeat itself here. This is one sequel I'd really rather not see.
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If they would tell me when the whole fukkin thing will crash then I can decide if "no payments until 2017" will work for me.
0% down, 0 risk for the buyer.
And...no risk for the lender.
Take the collateral and mark it to fantasy. CTRL-P every penny to muppet/deadbeat willing to sign for it...
Make a fancy wall street bet there will be a default. Then dump it on the taxpayers at par via FNMA or FHLMC.
Linda Green signs it and everything is good! If you do this enough times you might even get a huge bailout as a victim!
It's just Barry rent and you don't have to pay if you don't feel like it
I for one am grateful for this exact type state fed assist, I just sold a home despite the market and the buyer who was blown away by the house, and deservedly, but good luck to them to pay the mortgage as they are at the edge of a declining economy. I am taking it all and waiting for the october/nov bottom? I know the market may rise still if march 20 is not too much of an elite surprise, but certainly the coming sept crush I plan to miss.
s.
yup, after all blackrock etc need someone to liquidate their long housing positions to.
Who better to buy the to.. hold the ba.... take advantage of this great opportunity than John Q Public?
I like the idea of helping people buy more homes, more easily, and more affordably.
This can be done very easily. Remove all the exotic loan bulshit and let the free market lower the fucking price of the home.
Great news for ZHers! Fascist cop shot 3 times including the head in North Philly at 4:45 EST. In very critical condition..
Cop is African-American as is the perps (shock). Hope you folks all happy the good guys got the jump on the man for once.
Are they Africans?
Or Americans?
One, or the other, numbnuts.
Cop has died. For idiots like Stoploss, the men involved were Americans who had African ancestors.
idk about the economist part, but the rest of your moniker is correct
Folks here talk real tough anti-Police stuff here, calling for violence against "pigs" etc. When it happens, you pussies can't handle reality. Now ain't that right?
LOL!!! That which connot be sustained, won't be, period.
I sure hope those ivy league eCONomists taste good.
I plan to make soap out of them....
Killing government killers is okay. Do you think they would hesitate to kill you if you were trying to rid yourself of their crime bosses.
Private security, that's another story.
Bravo! Now here is a man who backs up what he says! Sir, I have the utmost respect for you, unlike these other ZH cowards/pussies who downrate me.
How can anyone downrate any lower the low life piece of shit that you clearly seem to be.
Your statements send contradictory signals, sir.
Are you rejoicing that a police officer got shot?
Or are you attempting to elicit such statement from a person on this forum?
Both/neither?
/ponder
Sticks and stones may break our bones but names can never hurt us.
Clueless writes like yet another gov troll attempting to entice a threatening response.
ROFL! Pathetic.
SMC....just speaking the truth. I am sure we agree 99% on the issues facing this country. Just caling out the loudmouth pussies among us.
If there is a loudmouth pussy amongst us it appears to be you!!!
Spoken like a true public servant.
I don't see anyone here getting all pussified over some bag man for the City of Philadelphia getting shot. My own personal opinion is if you're going to interfere with a man involved in the operation of his business you're just asking for it.
Since when is police capitalized?
QQQQ SH
Accountability to the public. It's coming.
After a long train of abuses, crinimal behavior, and no accountability; anybody who thinks what has gone around won't come back around is living in a skittle shitting, barry is a US citizen, the economy is recovered, the terrorists hate us for our freedom, steel fram buildings collapse from 45 minute fires, jews don't own the media or banks -- IOW world completely divorced from reality where most Americans live.
How's that for financial innovation? They have managed to eradicate the consequences of moral hazard forever!
Here's the real life circumstance of low interest cheap money. If you saved 200k to buy a small house, would you pay the whole thing in cash or finance over 30 years? If you did finance, would you keep the cash under the matress, in a bank account, the market or in PM's?
Buy it on a reverse mortgage, take the equity and cash to Vegas and place on black. Much more exciting, and you still have a place call home.
Does anyone leave anything for their children anymore? Wasn't it always about the children? Giving the reverse mortage $$ to your kids may be cheaper than paying an inheretance tax later.
Children? What are those?
The end of the movie Casino was so prophetic
http://youtu.be/tbQfFbZOBMg
My wife and I just went through this very debacle. We opted to stay in cash. We were able to find a deal very similar to this BBVA nonsense. We have a 1.5% interest rate, put no money down, and paid no closing costs. We didn't even disclose the account that was holding all those reserves. On paper to the bank we're just a tech-working class couple buying a house.
Over the life of the loan we're only going to dish out about $20,000 nominal in interest and it's a 30 year note. Just given the inflation over the last 30 years bringing $1 to 1/3 of it's 1983 value, it seems like a no brainer to let the bank eat shit in 20-30 years. We're never going to refi this loan either unless we have to sell.
That is what cheap money is for SPEND SPEND SPEND! !!!!!
Sure, that loan is just a 30 year lease from the bank and a forever lease from property taxes but the alternative was a yearly renewing lease from a landlord, his bank, and his property taxes. We're just one layer closer to actually owning anything, too bad the last layer is impossible to break through. I'm not a RE cheerleader by any means, but if we dumped all that cash into the house we'd increase monthly cash flow but we'd be out the money. We both still work (for now) so it seemed logical to forego the cashflow and just hold on to the money.
On the more evil side... if the neighborhood goes to complete shit we can just walk away from the house, tell the bank to get fucked, and buy (or not) the next one in cash even with our credit destroyed. Seems like this was the best option out of many shitty ones.
What bank is doing mortgages at 1.5%?
One that borrows at 0%? Oh wait that's all of them.
Maybe one that creates loan principle out of thin air? Oh wait they all do that.
One that...
Oh nevernmind.
Sounds gread KCMLO, except the part about the cash.
Turn that paper into gold, silver, and some lead for home security!
Doesn't surprise me one bit, I see all these crazy financing deals coming back and I'm reminded that people never learn. Reverse mortgages are back too and being pushed by a tv celeb cum presidential candidate....crazy is as crazy does.
Don't wait, call now!!
These types of deals popping up in force are definitely a sign that we are in the last inning.
With regards to BBVA Compass (formerly "Banco Bilbao Vizcaya Argentaria SA"), it appears that risky lending is their specialty..
"BBVA Compass is a subsidiary of BBVA Compass Bancshares Inc., a wholly owned subsidiary of BBVA (NYSE: BBVA) (MAD: BBVA). BBVA is a customer-centric global financial services group founded in 1857. BBVA Group has a solid position in Spain, is the largest financial institution in Mexico, and has leading franchises in South America and the Sunbelt region of the United States"
https://www.bbvacompass.com/compass/
I recently heard a radio ad about a seminar in SF bay area that would teach you how to make EASY MONEY FLIPPING HOUSES!!!
You can flip houses at home, work a couple hours a week, using Othe People's Money!
But hurry, call now because seating is limited!
When I heard it, I thought to myself that it must be about time for another crash when you're hearing shit like that.
There isn't a week or two that goes by here in Dallas without some flipper or another rolling through with their "amazing, exclusive" flipping program. With "special" funding programs to boot.
I don't see the problems with flips.. unless you're the lender. Then you take notice and act accordingly.
be "patient", once NIRP starts you will get paid to take out a billion dollar loan...
in 10 years time. America is going to have the finest junkyards for spare parts the world has ever seen. I predict in 30 years time our roads will look like Cubas, with 50+ year old vehicles in working shape.
I already own a 50 year old vehicle in good working order. What are you trying to say? That I'm Cuban? ;)
That depends, how well do you roll?
Mild 383 stroker small block Chevy with a blower, high stall converter, steep gears, cheater slicks and a street/strip suspension setup. It surprises a lot of modern cars stoplight-to-stoplight. It does alright.
71 Mach 1 .351c. I tell everyone it's the best on gas of anything I have . I only fill it up once a year
1966 Shelby AC Cobra, 427CID with Hilborn fuel injection.
Sheeeah! I wish!!
A really, really fast car'll go 0 to 100 in ten seconds.
Your car will go 0 to 100 and back to zero in ten seconds.
'Course, that's all it'll do (besides look real pretty).
A good way to surprise people at stoplights is a Volvo wagon with a Ford V8.
http://bringatrailer.com/2014/09/06/v8-swapped-1983-volvo-240dl-wagon/
More like the Australian outback in a certain low budget film that made Mel Gibson a star.
Cuban roads would be a dream compared to Illinois. Where you not only already have 3rd world roads, you also get your car covered in salt 4 months a year. We call it the UAW circle of life.
Lol have you seen the roads/bridges in LA, specifically in the westside/UCLA area? They already look like Cuban roads, huge pot holes everywhere.
Got two words for you: Camden New Jersey
Two words, eh?
Common core maff.
I am surprised someone hasn't named their cannabis dispensary, The Pot Hole.
Gee, I hope nobody on Wall St. packages and resells these loans as Triple AAA mortgage backed products. Nah, they'd never do that. Not again. Not so soon. It's OK we can depend on them not to undertak such risky behavior that could jeopardize sinking their own institutions (and all of the modern financialized world) just to make a quick buck.
The question that enters my mind is, why do these investment banks even spend the money to get new "civilian" customers anymore? Why do I see any commercials for TD Ameritrade or Fidelity, or any of these large consumer investment firms? Shouldn't they have enough of the debt-based assets at this point to just re-hypothecate on their own? Why do they need consumer cash anymore to make their balance sheets look good?
You presuppose a limit to their greed. There is none.
Ah, of course, I concede my stupidity. Being a lower-middle-class to middle-class person my entire life, I often perceive that everyone can find contentment with what they have... how foolish of me.
It's ok, granny's got this.
If want it we need, it and if you dont give it to us , we ill sue and vote you out scumbags;
You better put back that Subprime 125% cash out purchase money mortgage to create reserves, and at close table buy a car with loan 9.99% and 6.99% Neg Am loan;
or ill burn down this FHA Crap shack to the ground.....
How else you gonna turn 9 million renters into sucker Owners? Sucka?? What will 2 million realtors do, if you dont? Hook?
Hoocoodanode!!!!
There is only one way to steal money from people who don't have any.
Give it to them.
A repeat of 2004, I betcha this time will they throw in the Free Flat Screen Teevee as Bonus if you sign within...
"I'll Buy That for a Dollar!"
chit... i gunna get me sum...
u gotta say 'git' not get. practice practice
I don't have a problem with this as long as the lender services the loans and is restricted from selling/securitizing the portfolio or receiving tax payer $.
If you can get a mortgage with negative interest rates, I might be able to buy a house someday. It may be made from Legos, but dammit it will be mine.(unless I fall behind on property taxes)
If they want to be so generous, why not just gift them the homes on condition they fix and maintain them? Which they WOULD if they actually owned them instead of renting from a slumlord.
These loans, disguised as 'help' for the lower income folks, is nothing more than a way to extract wealth from them and maintain a hold on them for a long period of time. Taking advantage of the natural desire to have a place of one's own to lock them into impossible payments.
And they're suggesting 84 month car loans, and using some loan proceeds to buy stocks! Are they fucking kidding me with this shit? It amazes me that these types of loans can or would even be offered, after what we've been through.
These people are scum. Buncha fucking shyster-grifters, all of 'em.
play da game ... dont hate da playa's
dont they need the Kindergarders of 2008 to graduate College before they are able to pull this scam again !!!!!!!!!!!!!!
@Seasmoke
They're too desperate, sorry I mean eager to wait that long.
It starts with college.
It's either this or junk bonds, take your pick.
As long as I can refi, who gives a rats ass....
This is a good deal.
Gets the crack hoes off the streets and gives em a place to work.
No one got repremanded after the first meltdown in 2008.
The question is, why wouldn't you do it again?
At the moment I'm feeling entitled to my own custom made Diesel Pusher Land Yacht with 3 Slides, gimme some fiat bitchez at 0% down for 120 months; this goy is good for it!
I wouldn't be caught dead in that thing.
What the hell does "creamy all leather furniture" mean? The former owner a bukkaki freak?
Will they throw in free Ebonics lessons so I can communicate with the neighbors?
Just buy a couple of glocks, you'll get along great with the neighbors.
"For some borrowers, saving up 3% for a down payment is still a hurdle they can’t quite clear"
That's just fucking pathetic. 3% down? A measly fucking 3%? You can't even come up with that anymore? Buy a $300k+ home and can't even cough up $10k?
Over here it's 20% minimum on the first home, 50% on the second, and 100% after that. And we don't have a problem with it. Most prefer to dump 50% on the first and pay it off in 10 years or sooner.
A nation of fucking deadbeats.