Ending the Over-lending trend
My short stint as a Loan Officer has taught me a lot about how real estate works. First of all no one has a clue what they are doing. This includes the fat cats at the top, but what is most surprising to me is the people that own multiple properties but don’t know what a Note is.
One of the crazier things I came across is 100+ plus mortgages. This is where the bank lends out more than the property is worth so that homebuyers don’t have to put anything down and can start spending on home improvements right away.
The simple fact that there is now negative equity in the home should give pause to more than just the borrower. This is because the relationship between lender and borrower is surrogate in nature and if the borrower cannot pay on the loan then the bank suffers and eventually the system suffers.
I am glad to see England’s banks are taking some sobering action:
Lenders are pulling deals for 100%-plus mortgages, leaving first-time buyers with a financial headache. : BBC News
Death knell for 125% mortgages?
Tags: mortgages
