Have you seen the movie The Big Short? It is based on the non-fiction 2010 book of the same name by Michael Lewis about the financial crisis of 2007–2008, which was triggered by the build-up of the housing market and the economic bubble.
I’ve seen the movie twice and each time I feel slightly sick to my stomach. When housing bottomed in 2011, $5 trillion was lost, nine million Americans lost their jobs, and millions lost their homes. In some places in the U.S. homeowners are still losing their homes in foreclosure.
I was disturbed to read the recent story in the New York Post that said: “We learned nothing from the last financial crisis. The housing market is set to collapse, again, and a key culprit, again, is artificial demand created by government policies.
“For starters, mortgage-software firm Ellie Mae reports that the average FICO credit score of an approved home loan plunged to 719 in January (the latest month for which data is available) from 731 a year earlier, and well below 2011’s peak of 750.
“It’s a dangerous sign lenders are loosening underwriting standards. Lower FICO scores correlate with higher risk of loan default.
“The Federal Housing Administration is a big reason for falling credit scores. So are Fannie Mae and Freddie Mac. The government housing agencies have slashed credit requirements under pressure from the Obama administration — like the Clinton administration before it — to qualify more immigrants and minorities with low incomes and “less-than-perfect credit.”
“Meanwhile, home lenders are approving more debt-strapped borrowers. According to Ellie Mae, applicants approved for mortgages in January had an average household debt-to-income ratio of 39%, up from 2012’s annual average of 34%. Borrower debt loads have been creeping higher each year since 2012, when Ellie Mae first started tracking such data.”
Does this sound familiar? Last year, Fannie Mae launched a new subprime-mortgage product called HomeReady that caters to recent immigrants with weak credit and limited income.
The new loan program, which offers “income flexibility,” allows borrowers for the first time to bundle income from roommates and relatives to meet qualifications for income. They only have to put 3% down, and can use gifts from nonprofit groups to subsidize their down payments.
“There is no limit on the number of non-borrower household members who can be present on a single transaction,” Fannie advises originators. And even then there is “documentation flexibility,” a frightening echo of last decade’s “no-doc loans.”
If you are looking for the right time to sell your house, maybe the time has arrived. When you read how housing prices have gone up nationwide and median incomes have been flat for years, we have an affordability issue. That means fewer and fewer potential homeowners can meet lending standards without putting themselves in jeopardy.
We are Styl Properties, Inc. here to help homeowners out of any kind of distressed situation and potential homeowners find their dream home. As investors, flippers or rehabbers, whatever you choose to call us, we are in business to make a modest profit on any deal, however we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple honest truth about your home and how we can help you sell it fast to resolve any situation.
Give us a call today at 402.909.0686 to let us know what YOU need help with!