Submitted by Mike Krieger of Liberty Blitzkrieg blog,
In February, I highlighted the fact that subprime loans were about to make a return in my piece: Subprime Mortgages are Back…This Time Marketed as “Second Chance Purchase Programs.”
In that article, I posited that with the “all cash” private equity shops and hedge funds no longer able to make good returns through buying new homes to rent, these investors would need some sucker to sell to in order to realize a return.
...That sucker, as always, will be the retail muppets, and those muppets will be lured in through subprime.
This is now starting to happen in earnest.
In that article, I posited that with the “all cash” private equity shops and hedge funds no longer able to make good returns through buying new homes to rent, these investors would need some sucker to sell to in order to realize a return.
...That sucker, as always, will be the retail muppets, and those muppets will be lured in through subprime.
This is now starting to happen in earnest.
The following article from the Wall Street Journal is both depressing and disturbing.Rather than allowing home prices to reset at a lower level after the 2008 crash where normal buyers could afford a sane 20% mortgage, our central planners decided to do “whatever it takes” to re-inflate the housing bubble.
This was achieved through wealthy investment pools buying properties for all cash.
The trouble is, with home prices now inflated by these financial buyers and no real increase in wages, homes are simply unaffordable.
So what do you do?
You bring back subprime and get the peasants long real estate with essentially zero money down all over again.
Truly remarkable.
From the Wall Street Journal:
While standards remain tight by historical measures, lenders have started to accept lower credit scores and to reduce down-payment requirements.One such lender is TD Bank, Toronto-Dominion Bank’s U.S. unit, which on Friday began accepting down payments as low as 3% through an initiative called “Right Step,” geared toward first-time buyers and low- and moderate-income buyers. TD initially launched the program last year with a 5% down payment. It keeps the product on its books and doesn’t charge for insurance. Borrowers also don’t need to put down any of their own cash if a family, state or nonprofit group provides a down-payment gift.
So a measly 5% downpayment wasn’t good enough. They had to drop it to 3%. Frightening.
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