Unindicted co-conspirator= PMI
One villain in this real estate debacle has to be the mortgage insurance business. If you talk to people or read stories about the adjustable mortgages that are about to reset, one thing that is left out is that most of these loans were initiated to avoid private mortgage insurance. If lenders, or loan officers, would have just said, "let's do a 30 year note on 100% or your home and buy PMI" a lot of the current troubles would not exist. People would have been qualified for, and adjusted to, their mortgage note plus the mortgage insurance premium. If they default, then the insurance would be paying the bill. Admittedly, there might be a number of insurance firms in trouble but at least the trouble would be honest trouble.
The cost of PMI vs the cost of a foreclosure or bankruptcy would be much cheaper. However, to put yourself in front of a loan officer who is telling you that with an 80/20 your note is $3500 a month and a 100% note with PMI is $3800 makes the decision a little tougher. Without hindsight, in 2005 this was a no brainer. Give me the cheaper note and I will re-fi in a year with 20% equity due to price appreciation. Obviously, not so fast. That $3800 note looks like a bargain in many circles these days, especially when your home is worth 10% less than you bought it for.
Do I want blood from these institutions? Certainly not, but there are many villains to go around in this mess we have. I just think they should all be outed and avoided in the future.
ts
The cost of PMI vs the cost of a foreclosure or bankruptcy would be much cheaper. However, to put yourself in front of a loan officer who is telling you that with an 80/20 your note is $3500 a month and a 100% note with PMI is $3800 makes the decision a little tougher. Without hindsight, in 2005 this was a no brainer. Give me the cheaper note and I will re-fi in a year with 20% equity due to price appreciation. Obviously, not so fast. That $3800 note looks like a bargain in many circles these days, especially when your home is worth 10% less than you bought it for.
Do I want blood from these institutions? Certainly not, but there are many villains to go around in this mess we have. I just think they should all be outed and avoided in the future.
ts
posted by Terry at 8:52 PM
2 Comments:
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Good words.
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