Why are the prices of houses falling in CO? (to rent, insurance)

[Threerun]

Originally Posted by TimtheGuy

This is complete media hype. If you are a "normal" borrower (can verify income) with "normal" credit 660+ you most likely can get a $0 down mortgage and can certainly get a 3%-5% down mortgage.

With values flat or possibly falling, a zero down mortgage is considered above average risk. No equity cushion.

Investors are not as willing to do those deals, obviously. I know my bank, and most of the surrounding banks won't do them either. Either have $$ equity or some tangible collateral to cushion the deal. Period.

[formercalifornian]

Originally Posted by NewAgeRedneck

formercalifornian wrote:

...so we are buying our next and final house for cash. It will be modest, but that's all we need and want.

Great strategy by the way! My wife and I took an interim step, taking out a mortgage for about 55% of the value on a bigger home than we actually need in an area where homes are still bringing in double digit appreciation. So far so good. IF our good fortune continues, the appreciation on this bigger ( read more expensive ) home will enable to buy our next ( smaller ) home with cash, and we'll be glad that we bought the bigger interim home. The thought of NOT having a mortgage is very comforting, but it can influence one to take some risks along the way to reach that point.

blessings....Franco

Good for you making sure that you kept your LTV low. You're taking a risk, but the payoff has the potential to be great if the market recovers and houses start selling again.

[formercalifornian]

Originally Posted by Threerun

He (get this) opted for the brokered deal because a VA loan took too long

More likely the VA had tighter standards and wouldn't have approved the loan. Oh, just noted the rolleyes. You'd thought of that already.

[TimtheGuy]

Originally Posted by formercalifornian

If those types of loans are so easy to come by, why did 30% of loan originations fail to close in July?

They did not fall into the "normal" that I mentioned...aka agency loans...aka saleable to Fannie/Freddie/Ginnie

[TimtheGuy]

Originally Posted by Threerun

With values flat or possibly falling, a zero down mortgage is considered above average risk. No equity cushion.

Investors are not as willing to do those deals, obviously. I know my bank, and most of the surrounding banks won't do them either. Either have $$ equity or some tangible collateral to cushion the deal. Period.

My bank never considered portfolioing ANY 100% (or even 90%) loans. As a matter of fact in this down market we like to lend up to 70% of tax value. However, we can originate $0 down loans for the secondary market all day long!

[Threerun]

Several conduits have totally dried up and closings are being canceled in our market. In fact, one closing attorney got caught in the middle of one that couldn't fund and we had to do a 90 day note to cover his butt until the borrower could find alternate sources of financing (which the attorney is begging us to do as a portfolio).

And the guy I mentioned would have qualified for a VA loan. He simply got caught up in the mindset of "If I don't buy it now, it'll slip away".. That's a simple rule a lot of people forgot during the latest boom. Only fools rush in. Hell, they didn't even read the Notes they were signing. Some of the good closing attorney's in our area said they told customers flat out "Personally I would NOT enter into this agreement". Guess what? They still did! Granted a lot of the borrowers purchasing their 'owner occupieds' were flippers and they should be burned anyway..

The fact of the matter is that the investors on the secondary market were able to ignore the mantra of prudent lending with the offset being higher risk/higher return. Now their crying the blues because the chickens have come home to roost. Boo-hoo for them, I'm crying a river...

The great thing for me (commercial lending) is that now the folks with smarts and liquidity are starting to re-enter the market. They were largely absent over the past 5-6 years because values were outstripping rental rates and ROI was in the pooper. I just did a 1.5MM loc for a guy with a great tangible N/W just to buy properties being foreclosed on or on fire sale because of this mess. As soon as he buys, they'll convert to portfolio commercial ARM's. Good DSC, good ROI, and an ever growing number of folks needing to rent.

[formercalifornian]

Originally Posted by TimtheGuy

However, we can originate $0 down loans for the secondary market all day long!

Oh, yay! Let's encourage people to buy vacation houses with 0% down when the primary market is at a stand-still. I'm sorry, but that just doesn't make me feel all warm and fuzzy about current lending standards and their effect on the real estate market.

[Tom Emmerling]

Originally Posted by vfrpilot

Tom- In 1990, this is what we needed to get a loan. About when did this change? Maybe it wasn't such a great idea after all, although it probably helped us when we sold in 2004.

Only about 3 weeks ago it changed so that you need the 10% down again. There for a long time (not sure exactly when) you could get 100% financing and also the interest only loans. Now those are going or even gone away. These companies that took these high risk loans are going out of business because they have lost so much money. That is why it has changed recently.

[Tom Emmerling]

Originally Posted by TimtheGuy

This is complete media hype. If you are a "normal" borrower (can verify income) with "normal" credit 660+ you most likely can get a $0 down mortgage and can certainly get a 3%-5% down mortgage.

Notice I said it can be really difficult, but not impossible. There are alot of people out there who are self employed and who do not have high 600 credit scores. Probably more than we all realize. For them it will be nearly impossible to get a loan without a down payment.

[formercalifornian]

Yesterday, I met a real estate agent who sold her house is another state and chose to rent once she moved to Colorado. I asked why she preferred to rent, and she replied that because the market is soft, she is hoping prices will drop further over the next couple of years.