When will they ever learn
Apr. 24th, 2009 05:05 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
pecuniumI'm seeing ads which make me think there are companies out there planning to cash in on the present turmoil in the housing market, by stirring the present pot.
LendAmerica, which has been running annoying ads; designed to look like news spots (on the Bloomberg model of too busy, with split windows and tickers on the bottom). They were about getting second mortgages, using Chris Dodd (D- Connecticut) to give it gravitas.
Now they look like investment spots. Don't own a home... this is the time to get one. "Nothing beats the pride and security of owning your own home" (really, tell that to the one in 14, or so, who are in foreclosure). They say lots of wall Street Firms are holding onto empty homes, and you can get a deal ("closing costs paid by the seller").
On one level they are right. If I had the money, I'd be looking at it (I know someone who scored a great deal on a house in Indiana.... About $9,000 and it was theirs. Paid in full. Needs some work, but it's not in bad repair. Just someone who had speculated, and didn't get out in time). But the ad goes on, touting "An FHA program which only requires 3.5 percent down, and includes money to remodel.
DING DING DING.... I am afraid the only thing which is going to save people from getting in over their heads is that the secondary lenders (Because I somehow don't think LendAmerica is really in the lending business, but rather in the "Make a loan, sell the paper" business), are being less liberal in their disbursing of money.
Doing a bit of research... It looks if I understand it, as if they are doing a few things. 1: When you go to their website, they have banners asking, "Are you afraid of the sub-prime market?"
2: They are a direct lender, which means they can hide some of their revenues.
3: They are actively acquiring Ginnie Mae mortgages, so they can offer mortgage backed securities.
4: There are a few complaints against them. I'd expect some (mortgages are complicated things, and lots of people don't get what they think they are getting).
5: The owners have had run ins with the law, related to mortgage fraud.
All in all, my less than warm fuzzy from the ads, is not changed much from the research.
LendAmerica, which has been running annoying ads; designed to look like news spots (on the Bloomberg model of too busy, with split windows and tickers on the bottom). They were about getting second mortgages, using Chris Dodd (D- Connecticut) to give it gravitas.
Now they look like investment spots. Don't own a home... this is the time to get one. "Nothing beats the pride and security of owning your own home" (really, tell that to the one in 14, or so, who are in foreclosure). They say lots of wall Street Firms are holding onto empty homes, and you can get a deal ("closing costs paid by the seller").
On one level they are right. If I had the money, I'd be looking at it (I know someone who scored a great deal on a house in Indiana.... About $9,000 and it was theirs. Paid in full. Needs some work, but it's not in bad repair. Just someone who had speculated, and didn't get out in time). But the ad goes on, touting "An FHA program which only requires 3.5 percent down, and includes money to remodel.
DING DING DING.... I am afraid the only thing which is going to save people from getting in over their heads is that the secondary lenders (Because I somehow don't think LendAmerica is really in the lending business, but rather in the "Make a loan, sell the paper" business), are being less liberal in their disbursing of money.
Doing a bit of research... It looks if I understand it, as if they are doing a few things. 1: When you go to their website, they have banners asking, "Are you afraid of the sub-prime market?"
2: They are a direct lender, which means they can hide some of their revenues.
3: They are actively acquiring Ginnie Mae mortgages, so they can offer mortgage backed securities.
4: There are a few complaints against them. I'd expect some (mortgages are complicated things, and lots of people don't get what they think they are getting).
5: The owners have had run ins with the law, related to mortgage fraud.
All in all, my less than warm fuzzy from the ads, is not changed much from the research.
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no subject
Date: 2009-04-25 01:51 am (UTC)I even have trouble getting a mortgage because I have such a large down payment. Some places won't TOUCH me.
I want a low monthly payment, I have a lot of savings, and I like my cheap house. WHY IS THIS SUCH A PROBLEM? Ug.
no subject
Date: 2009-04-25 01:55 am (UTC)I suspect the places which don't want to let you borrow are looking at their slice of the profit. They aren't going to keep the mortgage, so all the money they make is in points, and costs.
A smaller loan means they make less money, ergo they discourage you from a larger down.
no subject
Date: 2009-04-25 02:25 am (UTC)And yes I know people frown on those sort of loans but
1. Since the market is slow, paying interest to ourselves actually isn't that bad, not like he took the money out of something making tons of money.
2. Our house is so cheap, the loan is actually quite tiny
3. If you decide not to pay it back, there are just tax penalties. Income tax ones, not like a 401k where you have other penalties too
4. This isn't his only retirement investment
Just in case anyone wanted to jump in with NEVER TAKE A LOAN FROM YOUR RETIREMENT!
Also, paying it off/owning a house is important because of Teddy. Not knowing where he will be, or if there still will be disabled housing options when he turns 18, we REALLY need a piece of property to at least ensure a roof over his head. We should have this paid off in less than 10 years. (Really, the house is quite a bit under 75k left -- it was rent to own.)
no subject
Date: 2009-04-25 03:54 am (UTC)This is how she explained it to me: FHA has to technically say that they have a prepayment penalty, but what that means is that money is only applied against principal on the first of the month, and if you get it to them on any other day, interest continues accruing until the next first of the month comes around, and then it is applied.
However. FHA doesn't use normal private mortgage insurance. With that, you can usually reappraise your house and prove you have 20% equity at any time. FHA uses a mortgage insurance premium. Some of MIP is added up-front to the loan, and some you pay monthly (0.5% per year). The up-front amount maybe can be refunded to you if you prepay early enough; there's a place to go online to ask for that. You can only get rid of the monthly addition after five years or 22% of the loan is repaid, whichever comes later; they don't count appreciation. Or, of course, you refinance into a non-FHA loan.
no subject
Date: 2009-04-25 03:56 am (UTC)About $9,000 and it was theirs.
Good God Almighty - as in total price of the house was 9K ?????
no subject
Date: 2009-04-25 04:02 am (UTC)I have friends who had a pre-payment penalty. If they re-fied the house, and that paid off the present mortgage, the owed the bank an extra 20,000 dollars.
In addition, until the magic pre-payment exclusion period was paid, overpayments on th monthly bill would not be accepted. They would be counted against the next month's payment, but no reduction in principle could take place until the first five years had passed.
no subject
Date: 2009-04-25 04:03 am (UTC)no subject
Date: 2009-04-25 04:07 am (UTC)no subject
Date: 2009-04-25 09:35 am (UTC)Something to remember: the banks and mortgage companies are a bit feckless over looking after the real estate which falls into their hands.
But at that price, it hardly matters.