This Michigan Bank Just Brought Back The Zero-Down Mortgage; They'll Even Cover Your Closing Costs

Tyler Durden's picture

A small savings bank in Michigan, Flagstar Bank, has come up with a genius, innovative new mortgage product that they believe is going to be great for their investors and low-income housing buyers: the "zero-down mortgage."  What's better, Flagstar is even offering to pay the closing costs of their low-income future mortgage debtors.  Here's more from HousingWire:

Under the program, Flagstar will gift the required 3% down payment to the borrower, plus up to $3,500 to be used for closing costs.


According to the bank, there is no obligation for borrowers who qualify to repay the down payment gift.


The program is available to only certain low- to moderate-income borrowers and borrowers in low- to moderate-income areas throughout Michigan.


Borrowers would not have to repay the down payment or closing costs. But a 1099 form to report the income would be issued to the Internal Revenue Service by the bank. So the gifts could be taxable, depending on the borrower’s financial picture.


Flagstar said borrowers who might qualify for its new program typically would have an annual income in the range of $35,000 to $62,000. The sales price of the home -- which must be in qualifying areas -- would tend to be in the range of $80,000 to $175,000.


Think it's too good to be true?  Lakeshia Wiley of Detroit's west side begs to differ...she recently went through Flagstar to purchase her new home and only had to come up with $350 of her own money.  Per the Detroit Free Press:

Lakeshia Wiley, 35, said she wouldn't have been able to buy her first home without the Fifth Third Down Payment Assistance program and two other grants, including one from Southwest Solutions.


The brick home, built in 1951, is on Detroit's west side, needed very little work and was priced at $50,000.


"I'm very excited every time I think about it. It's beautiful. I love it," Wiley said.


Wiley never expected to be able to buy a home, though, because she has had a hard time saving for a down payment.


"I didn't think I'd be able to do it," said the single mother who has two sons, ages 17 and 10, and a daughter, age 6. She works at a Detroit pharmacy.


Thanks to the down payment assistance and the grants, Wiley was able to buy her home in April. She had to bring less than $350 to the table at closing.

The Flagstar program is available in 18 counties in Michigan, and could be used for certain homes in Detroit and Flint, along with other cities.

Of course, we would highly encourage Flagstar to take a look back into ancient history for case studies on what happened the last time banks started peddling "innovative" mortgage products.  Here's a summary of the Lehman Brothers case study:

Ironically, South Park also did some fascinating research on the topic:

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Giant Meteor's picture

Shit, why not ..

Throw the kitchen sink at this puppy ..

Ghost of PartysOver's picture

Nope!  Have not reached Peaked Stupidity yet.  Maybe next week, or the week after.

Giant Meteor's picture

I agree no peak insanity  just yet, but the time line does seem to be accelerating ..


Chuck Norris's picture

Great!  So now all my new neighbors will be getting in with zero down.  And how blessed I will be with a much more diversified 'hood

 That's less than a security deposit on a rental home. What could go wrong?


YUNOSELL's picture

Visible desperation is the worse marketing tool for a Ponzi Scheme

poland spring's picture

Freedom Credit Union (Philly) gave me an email about no-money down mortgage for 1st time buyers.  No closing costs either.  

a Smudge by any other name's picture

Got arthritis? Can't hold a pen? Never learned how to read or write to begin with? Don't worry, we'll sign it for you. In fact, we probably already did. Chances are we just originated a loan for you! After opening up a credit account in your name at Well...well we can't actually tell you. So welcome to your new home! Congratulations! You are already in default. You missed your first 2 payments. But don't worry, you don't owe us a penny. We already sold your mortgage. We've already produced a synthetic MBS of a synthetic MBS of a synthetic MBS and sold it to a bunch of goatherds in Buttfuckistan. Say I have to run and buy another Mercedes. Fun doing business with you, keep the pen, I have LOTS of them!

Stuck on Zero's picture

Don't worry about Flagstar. They will hold those mortgages all of about an hour before they can be bundled, securitized, blessed by a rating agency, and wholesaled to a junk bond merchandiser in NYC. Ultimately the taxpayers will hold the note.

J S Bach's picture

With a good old-fashioned, trustworthy, responsible and conscientious hood-dweller like Lakeshia Wiley, what could possibly go wrong?

ItsyBitsy90's picture

Welcome to Detroit....where the locals think that everything is fine, the crime rate is always in someone else's backyard and their kids are going turn out just fine..../s

Manthong's picture


..if they pay me a $100K up front I will buy anything in the F’g state.

Escrava Isaura's picture

Principal? Who cares?

No one is going to live that long. We barely have 10 years left, if that.

Today 42% of all mortgages in Australia are interest only. 


sixsigma cygnusatratus's picture

I don't see a problem here.  It's different this, it's differenter this time.

N0TME's picture

Funny thing is this is probably close to the truth of how it really works

Wells Fargo Bank anyone?

MEFOBILLS's picture



The FED is post facto.  The private banking complex created the FED.  The private banking system/complex agitated for 601SPV's to then allow MBS creation.

The 601's were lodged in TBTF banks, and many of these TBTF's were FED primary dealers.  

After collapse in 2008, the FED bailed out private bqnking corporations, often with QE or cheap loans. QE buying of MBS with new FED keyboard money, propped up the face value of MBS. Buying of MBS in this way threw Sheriff's off the robosigning scandal trail.

It is important to note that a private bank always finds reserves POST FACTO, up to the last minute.  If they cannot find reserves on the overnight market, they can go to the FED discount window.  A bank is not reserve constrained.

The FED is a creation of the private banking system, and is a post facto agent.  The only thing limiting emission of private bank credit is private bank's capital position.  Capital is the holding of 'wealth" usually in the form of debt instruments and investments.

If the underlying debt instruments collapse, and real estate is typically 70% of debt instruments, then there is mass contagion, as everything collapses suddenly.

Private banks emitting credit to a population, to then buy property is stupidity of the highest order.  In the old days of U.S. there were savings and loans, and this was pooled saved money.  And yes our (((friends))) were instrumental in collapse of Savings and Loans - their usurious hands always in the cookie jar.  The new housing debtor in Savings and Loan system, also had to have significant down payment.  This kept housing prices from running away, and interest paid on mortgage vectored back to old people creditors, who had "saved" over their lives.  The interest in this case could not be considered as usury.  A housing loan could not exceed 25% of a person's salary, in additon to the large downpayment.

Shaniqya and Laquisha could not get a liar loan or a Ninja loan (no income, no job) from a bankster in those days.

In Canada from 38-74, to take out  house loan, you had to go to a Trust, which was similar to a U.S. Savings and Loan.

Escrava Isaura's picture

Because ‘our friends’ don’t believe in life after death.

We only have one time around.

Live as large as you can.

This is it.


ejmoosa's picture






fockewulf190's picture

Lynette Zang shows exactly what the Fed is up to regarding MBS. The Farce is truly with us. The whole video is good, but zip to 07:50 for the relevant info.


veritas semper vinces's picture

Well,it's more like: the Banks run this f*cking place and the Western world.

chunga's picture

Q: How do banks steal money from people who don't have any?

A: Print then give it to them.

Emergency Ward's picture

Don't forget to show that outstanding loan as an ASSET on the balance sheet!

chunga's picture

Enabling further hypothecation.

Also print enough fake money to insure against default, hope the borrower doesn't repay, cash in, recover the property in foreclosure, sell debt to fed at par, blame irresponsible borrower, rinse, repeat.

The US is one giant layer-cake of pure, solid fraud.

a Smudge by any other name's picture

Yet it won't make the MSM headlines unless it's a gay wedding cake.

nmewn's picture

Door number two.

It's a brand new home!

That's right Bob! It's the all new 2017 McMansion, with swimming pool, man cave, three car garage, five bedroom, three and a half bath, fully subsidized w/no money down.

It's all yours compliments of the cartel...if...the price is right!

(If you can pay the mortgage)


chunga's picture

We need a revolution in this country bad. The other article is making me physically ill, included in congress' compensation package is confidential sexual harrassment settlement insurance.

It's unfuckingbelievable.

nmewn's picture

Well at least the sheeples attention was sufficiently diverted over statues & monuments to keep their eye off the ball for a little while.

What they need now is a big ebola or enfluenza scare  ;-)

yogibear's picture

Central bank rigging continues

Their buying bonds feverishly as they begin to drop. Can't have price discovery, now can we?

Donald J. Trump's picture

Shit, they don't even give it to them.  They print it right into the banks account.

Bay of Pigs's picture

I used to do loans in the early 2000’s and Flagstar was a go to outfit for the no cost loans. Overlake Mortgage (WA) was the first to offer that type of loan in the country way back then. Led to the outfits like Wachovia, WaMu and Countrywide going nuts with very risky and fraud ridden practices.

The Housing Bubble Part II looks to be back in high gear.

Endgame Napoleon's picture

I was working as an insurance agent at the time of the housing collapse, serving a different clientele than the luxury retail customers I worked with for years in a totally different area, which is related to the housing industry. It was an interesting juxtaposition of buying patterns and consumer attitudes, not at all what I expected. The poverty sector was much faster paced.

The poverty market was soooooooo much bigger.

No wonder people try to tap it, rather than competing with umpteen others for the few, value-added customers at the top and in the waning middle. The poverty market also has the added advantage of sweeteners from government, ensuring a bread-and-butter supply of customers who either have to buy your product or who get money to buy your product from government, which favors some citizens over others, specifically those with kids.

Every day, an employee of AIG’s subprime retail home loan wing came down to chat with us in the insurance agency, telling us all about the high volume of business in his store. We, too, were super-busy, slammed every day, unlike many stores serving what is left of the middle class and affluent clientele that you often must chase, competing with a thicket of salespeople, to close enough business.

In the poverty market, the skill was in the ability to juggle the multitude of underfunded, underemployed Americans, pouring through the door, not to up-sell a few by offering top-quality options and holding onto the others through good price-down alternatives, as in luxury sales.

There was one of those subprime home loan sales offices in every section of town, suffering from stagnant wages, in a state with a per capita income of $19k. The slammed loan processor guy stopped coming around right about 2008.

Endgame Napoleon's picture

You and your neighbors will be expected to pay up, assuming you lack productive wombs. Or, you could skip the fruitless effort that leads to zero rewards for you, anyway, living in mom’s basement.

Ajax-1's picture

Excellent job Fagstar Bank. What could possibly go wrong.

Donald J. Trump's picture

I think Flagstar is more interested in originating mortgages and then selling them off quickly.  Makes sense in this case.  They make buck on a bad bet and then unload it on someone else.  Same as it ever was.

BTW I got SouthParked this week by Tim Hortons.  Had $40 reloaded on a gift card and the store's Pos rejected it.  Called Tim's and they said it was frozen and gave me the run around.  Next day balance was zero.  Called and said WTF and they said sorry, and it's gone.  No explanation or anything.  Just it's gone.  I asked for a supervisor and they said there aren't any.  Uncle Warren stole my $40.  Just a heads up on gift cards folks.  

a Smudge by any other name's picture

Once again eliminating company scrip as a viable currency.

peippe's picture


i tried to use up a starbugs card, & handed them a $20 too (card was low).

Starbug took the 20 & put the change on the damn coffee card? 

me no likey. (at least i THINK the change is on the gift card?

this country BLOWS.

HRClinton's picture

(((They))) need to keep you in their casino. 

(((They))) want you to use your fiat to buy everything manipulated by (Them))): Stocks, RE, and... PM.

Only Insiders get rich with their Fees, Commissions, Bonuses, Spreads and other rent-seeking biz models. E.g. "Newsletters, anyone?"

And so the wealth transfer to (((Them))) continues. In the meantime...

Look! There! Another social or political scandal! Rumors of war! Natural disaster! Salute the flag! Skittle-shitting Unicorns invented by JV from Wall St, Big Pharma and Silicon Valley!

davinci7_gis's picture

I saw a Matress Firm sign yesterday that said no interest, no payments for 5 years!  Wow, this is a crazy ass world we live in!

Ajax-1's picture

At the end of 5 years, let the bank reposess it. Who cares?

Drain Bamage's picture

Took the words right out of my mouth

maxblockm's picture

Banks HAVE to get that shadow inventory off their books. It destroys their reserve capital. They can give it to you at a "loss" (considering downpayment assistance) as long as it gets out of their name and into yours, and you make payments on it. 

Sy Kloine Bee's picture

Lakeisha will pay it back. /s

sodbuster's picture

Lakeshia couldn't come up with a down payment- think she'll be able to replace the water heater when it goes? Fix or replace the HVAC? How about the roof when it needs to be replaced? It's wonderful she wants to own her own home- just wondering if she realizes these things or if anyone brought these to her attention. More than likely NOT.

ParkAveFlasher's picture

You can complain about Lakeshia all you'd like, but you'll prefer her when the alternative is Aisha and MoHHHammed .

Juggernaut x2's picture

I'll take "None of Them" for a thousand, Alex.

ParkAveFlasher's picture

The social engineering of neighborhoods will continue until morale improves.  I'm just telling you what's coming.

I live in the "most diverse" county in the nation, Queens County NY.

Just when you can't enough of one group of immigrants, there is a whole new batch. 

If I would be threatened by the various groups, they would first the Chinese because they take up like rats and don't leave, and are heathen to the core.  Yes they work hard, pay taxes, etc. however their wealth and insularity makes them all the more formidable in cultural transplant.  They don't intermarry with heritage Americans for 3 generations here, I've noticed.  They are shrewd, they buy up the distressed and old properties because the old retirees have children that have been two-generations removed to the burbs where they are heavily mortgaged, and refuse to take up generational wealth positions on the value high-ground.  American families tend to spread too thinly, thus I see more densely networked groups move in and drive out thinness, esp the Chinese. 

The second are the "ninjas", those would be that type of Islam where the women walk around dressed like halloween phantoms and you never see the men.  Where are the men, what are they doing?  Nobody knows.  They are also being shoehorned into conservative nabes, house by house.

Again, just telling you how it rolls.  First you indebt the citizenry, via cheap credit, moral degradation / atheism, and value-rot, and then you take up their homes, and then you let the homes out in bulk to the group of your choosing, preferably a foreign entity that can reimburse you in such a way (offshore) so as to keep the cycle going.

just sayin, don't shoot the messenger.  Be careful what you complain about, and what you wish for, in fact I wouldn't complain or wish, but pray.



Tapeworm's picture


A property that was last a goomint financed job for 138,000 got bought by me for 17,800 within sixteen months of the previous sale.

 It was fraud all of the way. Of course the local newsrag had no intention of showing the fraud.

 Perhaps this woman can cashflow her house and save for the usual expenses.

 I wish her well.

amadeus39's picture

I wouldn't be too sure about that. Mohammed has off-shore resources to rely on. Expect a tear down and a beautiful mosque erected.


ParkAveFlasher's picture

Move to Germany, see how that scenario actually plays out.