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Article is paywalled, but based on the first paragraph it seems like this might not be entirely bad, as long as the banks are doing their due diligence. My wife
by rhombocombus 8y ago
Article is paywalled, but based on the first paragraph it seems like this might not be entirely bad, as long as the banks are doing their due diligence. My wife's income is 100% 1099 self employed, which has made it challenging to get mortgages in the past. I think that it's critically important to vet borrowers thoroughly for obvious reasons, but I also think that home loans should be available to folks who might not get a W-2 but can still pay their bills.
- jasonparallel 8y agoThe article says not having "pay stubs or tax forms". Seems like you would have to prove tax evasion to the bank to verify the income.
- onetimemanytime 8y ago>>it seems like this might not be entirely bad The problems start when they can't pay back their $600K mortgages with a $17 an hour job or freelancing here and there. Mortgages are pretty old as a product, banks know who is likely to afford it and who isn't. Mortgage payments are due every month of the year for 15-20-25-30 years, and that's the problem.
- matthewmacleod 8y agoMortgages are pretty old as a product, banks know who is likely to afford it and who isn't. Doesn't the sub-prime crisis basically blow that theory out of the water?
- giarc 8y agoMortgage lenders likely knew these people couldn't pay it back, that's why they sold the debt as fast as they could.
- patio11 8y agoIf this were true, you’d expect America’s largest banks to have had only 60 days or so of subprime mortgages on the books, which would have meant minimal exposure in the scheme of things. In the world we live in, Bank of America fell by 95% or so, Citibank missed nationalization by a whisker, Wachovia was forced to merge, etc etc, and that’s not even counting the investment banks, because they were happily engaged in the traditional business of banking in addition to securitization.
- onetimemanytime 8y agoNope, the sub-prime lenders deviated from the norm
- derekp7 8y agoThe other piece is loan to value. So depending on how many other people the nursing student in the article had to buy out, her share could be as high as 50% of the house (if it was split between 2 people). In that case, there is really no risk for the bank as they would more than recoup their losses in a foreclosure.
- onetimemanytime 8y agoOK, but did you read such mortgages grew by xx% and conventional mortgages went down last year? Not all of them were buying out their relatives. "Lenders issued $34 billion worth of these unconventional mortgages in the first three quarters of 2018, a 24% increase from the same period a year earlier....the growth is notable because it came as traditional home loans declined. Those originations fell 1.2% over the same period and were on track for a second down year in 2018."
- wil421 8y agoI know someone who had an issue with 1099 but it was with the lender. They didn’t want to shop around. Here’s a useful article where people were able to get loans on 1099, including VA loans. It seems 24 months is required.[1] [1]https://www.trulia.com/voices/Home_Buying/I_am_a_contractor_can_I_obtain_a_mortgage_Its_a-593628 https://www.trulia.com/voices/Home_Buying/I_am_a_contractor_...
- lordalch 8y agoSince I see links to WSJ pretty frequently, I installed https://github.com/danielmichaelni/let-me-read-wsj https://github.com/danielmichaelni/let-me-read-wsj to bypass the paywall