Posted by HisHughness on 3/8/12 2:11pm
Msg #414329

Closed a loan this week where the owner...

...was upside down. The loan was a VA refi, and it was for over $20,000 more than the appraised value of the property. He brought no money to the table, and there was no mortgage insurance.

In essence, the lender was loaning on $20,000 without any collateral, and no insurance to cover any loss.

How is that possible?

Reply by TacomaBoy on 3/8/12 2:32pm
Msg #414332

Closed a loan this week where the owner...

Hmmmmm . . . Some possibilities: Sounds like it is a "bank portfolio" loan, rather than a loan being sold into an investor pool. It also sounds like the home is a nonconforming property of some sort? I'd imagine the bank took a hit to it's loan loss reserve by writing the loan down to it's market value. Anything that is collected back above the market value is a recovery for the bank. Is the borrower a super bank customer with big balances or something?

Reply by ReneeK_MI on 3/8/12 2:59pm
Msg #414333

VA Streamline program would do it, but

wouldn't require an appraisal.

Guidelines: http://www.benefits.va.gov/homeloans/irrrl.asp

Reply by MW/VA on 3/8/12 3:02pm
Msg #414334

Happens all the time here. FHA or VA streamline refi's

are non-qualifiying & there's no appraisal. The value of the property is not at question. They refi the existing loan balance for a lower rate/lower payments. It's been the majority of my biz over the last 2 years.

Reply by Barb25 on 3/8/12 3:06pm
Msg #414335

Re: Happens all the time here. FHA or VA streamline refi's

I have seen seen the same here with VA loans. Same circumstances.

Reply by Saul Leibowitz on 3/8/12 5:48pm
Msg #414369

Re: Happens all the time here. FHA or VA streamline refi's

also a lot in Northern Illinois.

Reply by ct on 3/8/12 9:57pm
Msg #414395

The HARP program will lend up to 125% of the homes value as long as borrowers qualify with income/credit scores..not everyone qualifies but its a great deal for those that can...no PMI