Credit unions offer no-down-payment mortgages
Loan officers say the products have performed well. Other options for loans with low or no down payments also are available.
Mortgages with no money down are back, if they ever left.
Two credit unions, the NASA Federal Credit Union and Navy Federal Credit Union, are offering members mortgages without requiring any down payment or mortgage insurance.
"We underwrite all of our loans so our members can succeed with the loan," Katie Miller, vice president for mortgage products of the Navy Federal Credit Union, told the Credit Union Times.
While there has been lots of talk since the real-estate bust about requiring homeowners to have more "skin in the game," more homeowners are turning to the Federal Housing Administration, which allows homeowners to put down as little as 3.5%, and the Department of Veterans Affairs, which offers no-down-payment loans.
Other lenders allow down payments of less than 20% if borrowers pay for mortgage insurance. Some lenders are also providing 100% financing to wealthy clients.
The NASA credit union restricts its no-money-down loans to mortgages in the Washington, D.C., suburbs, a market it knows and believes has hit bottom, according to the Credit Union Times, and also applies tighter underwriting standards. The credit union holds the loans in its portfolio, because they can’t be sold in the secondary market and backed by Fannie Mae and Freddie Mac.
The Navy Federal Credit Union underwrites no-down-payment mortgages the same way it underwrites other loans. It allows sellers to pay up to 6% of the purchase price and makes $2,500 available to help members with closing costs, according to the Credit Union Times.
Both credit unions said the loans have performed well.
"We know and trust our members, and we believe they know and trust us," Richard Morris, vice president of mortgage products at the Navy credit union, told the Credit Union Times. "It really is all about our members. They understand how the credit union seeks to help them, and they want to help the credit union, too."
While many have attributed the foreclosure crisis to homeowners who made no or low down payments, even a 20% down payment would not have kept their loans from going underwater in hard-hit areas such as Miami and Las Vegas.
So far, the definition of a qualified residential mortgage, which grants certain protections to the lenders, does not specify a down-payment level. Setting such a limit is still under consideration.
Do you think lenders should require higher down payments, or should homebuyers have the option of low or no down payments?
The fiscal collapse had it's routes in political and social agendas. Organizations like HUD (Housing and Urban Development), backed by the Justice Department basically threatened banks with discrimination lawsuits unless they gave mortgages to blacks in much higher numbers.. Under this threat the banks abandoned sound banking practices re: vetting people regarding work history, credit history etc. All the normal criteria was ignored in order to meet quotas of granting minority mortgages. ACORN, the socialist, radical shakedown group (for which Obama at one time worked) announced that there had to be a parity in mortgage lending and that home ownership was the new entitlement for blacks (to achieve "equality"). Andrew Cuomo who headed HUD at the time admitted that many of these mortgage recipients would not pay their mortgage, but he was OK with that because overall it would put more blacks into home ownership (remember that when he runs for president). The end result was as disastrous as it was predictable. Huge numbers of these sub-prime mortgage recipients reneged on their obligations and defaulted. The vast majority of working people (white) had to pay the bill and in the process many lost their retirement savings amidst higher taxes, and collapses of retirement fund investments etc. Yet, even now because the law has still not been changed - banks run commercials advertising mortgages with the quip "An equal opportunity lender". The very same thinking and agenda that destroyed the US economy and damaged the rest of the world's. Banks should not use social agendas as a basis for lending (they only did so under threat from the Justice Dept). They should loan money based on the risk assessment of the customer. His ability to pay., His work and credit history. America has been damaged because of ideologues pressuring banks, schools and lawmakers to replace sound practices with crazy, destructive ones because they don't care about the country. They have an agenda. A very destructive agenda.
Here is a wake up call!
The world's most powerful people
No. 6: Ben Bernanke
Title: Chairman, U.S. Federal Reserve
Ben Bernanke has led the Federal Reserve on a buying spree: In a third round of quantitative easing, the central bank is snapping up $40 billion a month ($480 Billion a Year) of mortgage-backed securities and $45 billion worth of Treasurys. The result is a modest economic recovery and a near-record $2.9 trillion on the Fed's balance sheet.
The American economy's "adult in the room" recently warned that there is only so much the Fed can do; Bernanke wants politicians to take the initiative needed to keep the country from going over the fiscal cliff.
· Mortgage-backed securities are debt in pools of mortgages. Holders of MBS are entitled to payment of interest and principal as the payments on the mortgages held in the pool are made.
· The majority of MBS are issued by the Government National Mortgage Association, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, known as Ginnie Mae, Fannie Mae and Freddie Mac, respectively.
· Ginnie Mae is a U.S. government agency; its securities are backed by the full faith and credit of the U.S. government. Fannie Mae and Freddie Mac are government-sponsored enterprises whose securities have certain guarantees but not full U.S. government backing.
· Regular pass-through MBS securities entitle holders to their proportionate share of principal and interest as payments are made. Exotic mortgage securities such as CMOs (collateralized mortgage obligations) and mortgage derivatives have different claims on various pieces of mortgage pools.
· Regular pass-through agency mortgage-backed securities are safe, marketable investments for investors or . Derivative mortgage securities can be dangerous and hard to value.
· Most regular MBS make payments monthly to investors that are a combination of interest and principal, just like mortgages. If interest rates fall, the pool of mortgages will be paid off faster and investors will receive their principal back sooner than planned. Rising interest rates will stretch out the time it takes an MBS to pay off the principal.
People should be able to purchase home with little money down only if they can prove they can afford that home. The problem is many loans were given to people who already had lots of debt or not enough income to pay there mortgage. The banks gave mortgages to people who didn't even have jobs in some cases. Banks need to take a look at debt verses a persons ability to pay, that is reasonable when lending money. They should be sure this person pays there current rent and bills on time and has little debt that may interfere with paying off there loan. Just because a person puts down less than 20 percent does not mean they can't pay for monthly payments on a mortgage. There are many factors to take into consideration. There are all kinds of circumstances to take into account . Banks and Individuals all need to take responsibility for there expenses and debt and there ability to pay. Everyone has to be responsible to do there best in this area so the tax payer doesn't end up holding the bag.
If you can't come up with 20 percent down chances are you can not afford the price of ownership. Owning a house has a lot of hidden costs that arise if you are the type with no savings likely hood is you won't be able to deal with these either and will incur further debt. And we will start the foreclosure cycle all over again. And by the way there is still a huge shadow inventory of foreclosures out there that have not ben processed yet for many reasons.
No, Don't people learn anything after the last 6 years. I guess people are going to have to spend
some time in jail before the lenders will listen.
If you don't have the money ----- Don't buy a house.
If you don't like Joe landlord ----Your going to hate the bank .
No $ down buyers destroy community's and that's a fact Jack ~!!!
11 full time years in real estate
I live in the Northern Virginia/ Washington, DC area and I work in the banking industry. I also have had an account with NFCU since 1998. First, these mortgages are going to be backed by Fannie or Freddie. That's why these institutions are willing to take the risk. Currently, mortgages have to meet Fannie or Freddie standards, even if they are not Fannie or Freddie loans (yet). While I support their efforts since most of these are likely to benefit veterans (like it did for me), I also realize that not all of their members are in the military/ DOD or have served in the military/ DOD. Some are FAMILY members of military/ DOD.
For loans in this area, it is definitely worth the risk for the right people. Home prices rose 14% in December alone and we have one of the lowest unemployment rates in the US.