Wednesday, November 16, 2005

Bwr makes 28k...buys 40k wants 400k house....HAHAHAHAHA

This bwr had a car payment of almost $800 a month...and only made about $28,000 last year. Wanted to buy a 400k home...but would look at a condo "if they had too". Somehow I don't think that spending 34% of ones gross income on a car payment is the best thing to do...but what do I know. That USED to be the rule when buying a house. Oh how times have changed. There is no way I was going to help this guy get a loan...but I'm sure somebody out there will "state" his income so that he will "qualify". This bwr has all the makings of AFB...but maybe they will be lucky...let's hope so.


Blogger SoCalMtgGuy said...

I hear ya...

but it's not the I/O that is killing the is STATED INCOME.

I/O is part of it...but people are going STATED to QUALIFY on the I/O payment.

If people had to verify their income...then even I/O would not have added so much fuel to the market.

11/16/2005 8:18 PM  
Blogger SoCalMtgGuy said...


brokers like to do stated loans because they are "easier" to put together...and lots of brokers don't know how to properly structure loans to make them work.

They might not know what income can be grossed up, how to figure out the REAL DTI, etc.

If your LTV is low enough, FICO high enough, and you have reserves, I do know of some a-paper lenders that give "full doc" rates to stated loans.

Generally, you will get a better rate for going fulldoc as opposed to stated.

11/16/2005 10:01 PM  
Blogger blogger said...

20% down. proven income. good credit.



11/16/2005 10:10 PM  
Blogger SoCalMtgGuy said...

housing panic...

it is simple...they found somebody to "pass the risk to".

If the banks had to hold the loans...most of this would NOT have started. BUT, since they sell the loans in 30-90 days...what do they care. If somebody will buy the "risk" they will be the intermediary and make the loan.

I hear ya...but that is what happens during manias. This is a lot like the junk bond mania of years ago. The bigger they got, the more risky they got...same thing applies here to mortgages.

11/16/2005 11:03 PM  
Blogger SoCalMtgGuy said...


I know that countrywide has a loan called the "fast n easy". I hear about it when I am out and about. I don't know all the details...but if you have over a 700 fico, and the LTV is 80 (maybe 90?!??), and you have reserves, then you get full doc pricing on stated loans.

Again, don't quote me on that... I hear about all sorts of loans out there...and I grab flyers that are out there to see what all the different companies are doing.

But that is one that I know of off-hand.

11/16/2005 11:11 PM  
Blogger SoCalMtgGuy said...

I would agree with that statement. Again, in that sense, I only know what I hear from friends and others in the industry.

I have heard about companies being stuck with a loans they cannot sell, but I cannot 100% verify through my seeing of their financials if that is true or not.

From my experience in the field...I know that there are a few companies that have been WAY below the market on many loans. I think (know) those companies will be hurting when they try to sell those loans.

For example...if my company and 2-3 other major lenders (all publicly traded big names in the industry) are all within 10-20 bps from each other...then here comes lender XYZ that is 75-125 bps better than 3-4 of us?!?!??!?

How is it possible to be that far "ahead" of your competition and still make money?!?!??

But yes, I think a lot of these lenders will be hurting in 3-6 months when they are still holding these crappy loans, or they have to sell at a loss.

I hope that helps some.

11/17/2005 9:13 AM  
Blogger SD_suntaxed said...

Your insight into the current RE financial lender lunacy is priceless, socalmtgguy. Thanks!

I love your blog!

11/17/2005 10:18 AM  
Blogger SoCalMtgGuy said...

Here is the thing with a company like Countrywide.

They are a massive of the largest in the industry.

Like all of the other big companies, they have a wholesale side, and a retail side.

Wholesale works strictly through brokers...they do NOT interact with bwrs at all.

Retail on the other hand is direct with the bwr. This is where you see the "offices" in shopping centers, banks, etc. Where you sit down with a loan officer, and they take your application and tell you what you can do.

Here is the thing. Each retail branch has their own numbers they have to meet. So they have more "liberty" to "make a deal happen" if they need the loan.

So why wouldn't everybody go retail then?? because the retail office can ONLY offer that companies products. A broker can go to ANY bank out there. So if you go in a well fargo, b of a, countrywide, bank office, etc...they can only offer you their own product lines.

There are certain situations where I have seen appraisals waived...but that is NOT the norm...and certainly NOT in this market we are entering now.

11/17/2005 11:31 AM  
Blogger SoCalMtgGuy said...

THAT is why I'm doing this blog!!!

Before I got into this industry I was dumbfounded how soooo many people were buying homes that were soooo expensive!!

MOST people have NO idea that they are competing with people that are STATING their income to "qualify" for a 100% loan!!

The people that are actually making the money ASSUME that because people that are making less than them can "afford" a house, they should be able to get one as well.


11/17/2005 11:49 AM  
Blogger SoCalMtgGuy said...

yeah, that is pretty much "standard" throughout the industry.

That also means that it was a retail outlet.

Wholesale would NOT deal with appraisers at all.

That countrywide LO, had another appraiser take a crack at it. I'm not saying they pushed value necessairly, but I have seen some appraisers do a pretty poor job looking for comps.

11/17/2005 1:10 PM  

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