When there’s no one left in the middle class to rape, guess you have to move up the ladder…

Obama’s mortgage freebies:  No-money-down mortgages are back

By AnnaMaria Andriotis, WSJ Market Watch

Mortgage Contract pic

Some affluent buyers are getting the keys to their new home without putting a penny down.

It’s 100% financing—the same strategy that pushed many homeowners into foreclosure during the housing bust. Banks say these loans are safer: They’re almost exclusively being offered to clients with sizable assets, and they often require two forms of collateral—the house and a portion of the client’s investment portfolio in lieu of a traditional cash down payment…. 

Market Watch logoIn most cases, borrowers end up with one loan and one monthly payment. Depending on the lender and the borrower, roughly 60% to 80% of the loan can be pegged to the home’s value while the remaining 20% to 40% can be secured by investments. On a $2 million primary residence, for instance, the borrower could get a $2 million loan, which would require a pledge of assets in an investment portfolio to cover what could have been, say, a $500,000 down payment. The pledged assets can remain fully invested, earning returns as normal, without disrupting the client’s investment goals.  Click here to read Market Watch: No-money-down mortgages are back

While these affluent clients may be flush with cash, this strategy allows them to get into a home without tying up funds or making withdrawals from interest-earning accounts. And given the market’s gains combined with low borrowing rates in recent years, some banks say clients are pursuing 100% financing as an arbitrage play—where the return on their investments is bigger than the rate they pay on the loan, which can be as low as 2.5%. Some institutions offer only adjustable rates with these loans, which could become more expensive if rates rise. In most cases, the investment account must be held by the same institution that’s providing the loan. See: Home improvement gets a makeover

These loans also provide tax benefits. Since borrowers don’t have to liquidate their investment portfolios to get financing, they can avoid the capital-gains tax. And in some cases, they can still tap into the mortgage-interest deduction. (Borrowers can usually deduct interest payments on up to $1 million of mortgage debt.)

Market Watch OpinionWhile these loans make up a small portion of banks’ overall lending, demand for them has been rising. BNY Mellon Wealth Management’s mortgage team says it experienced a 10% increase in requests for 100% jumbo-mortgage financing involving clients’ investment portfolios in 2012 compared with a year prior. BOK Financial, which offers up to 100% financing just to medical doctors through its private-banking divisions in eight states, including Arizona, Oklahoma and Texas, says there has been a roughly 25% increase (or about 100 more borrowers) in this lending from a year ago. Also, at Citi Private Bank, applications have been growing over the past two years. “Demand is two to three times what it normally is,” says Peter Ferrara, managing director of the private bank’s residential real estate. Click here to watch Market Watch video: Opinion: Obama’s mortgage freebies

Some banks are using this product to lure in clients, such as BOK Financial’s offer, which is available to new physicians. To provide the loan, the bank must first receive proof that the borrower has cash or investments, like stocks or mutual funds, that equal 10% of the borrowed amount. (The company says it doesn’t seek a pledge of those assets but just wants to know that borrowers can meet their obligations over time.)

What to consider before signing up:

  • Portfolio restrictions. The amount clients can borrow against investment accounts will depend on what the portfolio comprises. In most cases, they can get up to 95% if the account comprises cash, up to about 80% if it’s bonds, and between 50% and 75% with stocks. Withdrawing pledged funds is typically restricted while the loan is outstanding.
  • Relationship pricing. To get the lowest rate, clients who already have significant assets at a particular bank should consider applying for 100% financing there.
  • Underwriting standards. Borrowers will still need to pass regular underwriting requirements, including having a high credit score, a low amount of overall debt—including student debt—and providing documentation of substantial income or assets.
    _______________________________________________________________

Doesn’t it look like an inducement?  Turn your fake investments into a tangible asset…quick… before we get taken down or go under.  We [banks] have all this property – you have all this worthless stock…please take a home…or two…before you find out how badly we duped you.

clouded-2Sadly, the rules haven’t changed, targeting, and deregulation still exists and we haven’t bottomed out yet.  Do you see them suggesting to look for clouded titles?

Do your homework [due diligence] Doc! They are apparently targeting you.

Those folks (the wannabes) that are still invested in the Wall Street stock market haven’t figured out yet that their investments or retirement are likely worthless.  Remember:  First come – first served…

“It never ceases to amaze me how the insanity continues unabated.” SJ

“Hey, the last housing crash was so much fun, why not start another one!! The Mayans didn’t predict the end of the world, so why not bubble our way to prosperity for some and poverty for others?” HH

“When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that justifies it.” AV quoting Frederic Bastiat 

8 thoughts on “When there’s no one left in the middle class to rape, guess you have to move up the ladder…

  1. This appears to me the banksters are after the house and the portfoilios now. The house was not enough., The administrtation can not be trusted.No one should be purchaseing any houses from these banks or renting houses that are stolen and I am betting all the foreclosed homes are stolen.

  2. Perhaps if they steal the houses right away, they can claim the portfolios and conceal theey were empty all along. Kind of like stealing all the houses that have no notes or ckear titles to conceal the clouded slandered titles. And quiet title what they can. If they can use the tool the house to steal the investments before they find out there are no funds in them, no one will know the diff. and the stolen houses will bring in revenue. Servicing fees foreclosure servicing fees and what ever they can get out of them AGAIN, DONT TRUST THESE SOB’S THEY HAVE PROVEN AN AGENDA TO TAKE THE PEOPLE TO THE CLEANERS AND NOT TO PROTECT US. Look up Geithner admits HAMP was to foam the runway for the banks video. The governments intent is to help the banks make unprescidented profit not to make sure you are safe in your home. As a matter of fact they want you living in the streets when they have pilfered all your funds.

  3. What happens when these pledged assets decrease in value during the next flash crash or Leaman like bankruptcy? This sounds like another scheme to leverage, rehypothecate or otherwise support the derivatives, reverse repo shadow banking system. The next crash will end up with the TBTF banks or the FED buying up devalued assets with printed money.

  4. I am a California Foreclosure Advocate – Looking for someone to help and support a foreclosure victim in Hawaii . Today I received the following inquiry;
    Catherine,
    Can you assist Sheri in learning about how she can access the financial benefit program the Federal government has instituted on wrongful procedures in sales, and in conducting foreclosures with out having clear titled paperwork, among other falsified irregularities? One item is the house, 5 years ago, was sold for $400,000 as permitted, which it is not. The state of Hawaii is starting to tear them down now. Sheri’s email is airgyrogym@yahoo.com

    Who can help Sheri?

  5. Pingback: No-money-down mortgages are back | Prepper Podcast Radio Network

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