No-money-down lender of the day

By Felix Salmon
September 22, 2009
this? 2005?

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What year is this? 2005?

Ashley-Gayle Boothe and her husband Scott have applied for a USDA-backed loan to buy their first home, a three-bedroom house 30 minutes north of Tampa, for $127,500. “We didn’t want to put anything down,” says Ashley-Gayle Boothe. “We figured we’d have to buy appliances.”

Of course, the clue that this is happening right now is the lender — yes, USDA as in the Department of Agriculture. Somehow it’s got its hands on $10.5 billion to lend out as no-money-down home loans. And of course taxpayers have nothing to worry about:

The agency argues it adheres to strict underwriting standards, assessing each borrower’s credit, income, and cash flow.

What could possibly go wrong?

(Via Moore)

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Comments
6 comments so far

Ashley-Gayle and Scott will just have to buy a refrigerator or two. (And stock up on soy sauce)

In related news:

[today] AGRICULTURE SECRETARY VILSACK AND CHINESE AGRICULTURE MINISTER ADDRESS TRADE CONCERNS, AGREE TO RENEW COOPERATION AGREEMENT

http://www.usda.gov/wps/portal/!ut/p/_s. 7_0_A/7_0_1OB?contentidonly=true&content id=2009/09/0458.xml

Posted by flippant | Report as abusive

OK, the USDA has some money to spend. But why make mortgages? What does this have to do with agriculture?

Posted by KenG | Report as abusive

Dude, where is my bailout?

Posted by Andrew | Report as abusive

well, the difference is that the same young couple would have been approved for 375K back in 2005.

they’re gonna be paying, what, $750 monthly max on that mortgage? could they rent 3 bedrooms for that little?

Posted by nick | Report as abusive

Yeah, that was my response.

Besides, lower-price-tier CA and FL suburban house prices have been pummeled good. With 20-20 hindsight this 100% LTV loan has *better* risks than some 50% LTV loans at the peak. A colleague this year bought an REO for $210k that at the peak had printed $530k.

That pattern hasn’t exerted itself so much in your prime NYC/SF-type markets, but the sticker price here tells you that you are neither in your neighborhood nor mine.

Captcha, appropriately: ‘rent’

“And of course taxpayers have nothing to worry about:”

I imagine taxpayers have less to worry about because I imagine if the borrowers don’t pay back their loan, they can be threatened with their wages being garnished until the day they die…. Can someone say if that’s true? (Is that also true about the FHA loans?)

Posted by a | Report as abusive
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