[Jackie Lange]

Jackie Lange

Interesting article from Dr. Housing Bubble. It implies that banks are catering to the wealthy with interest only loans but fails to mention that historically people who buy million dollar houses do NOT DEFAULT, so they are a safer bet. Banks are, or should be, in the business of making SAFE loans.

Keep in mind, these interest only loans for million dollar+ houses are only for the first 3 years… so what happens at year 4? I think you will see more defaults in a market that has traditionally not had a problem.

We all saw what happened when banks were forced to make “not safe” loans, like stated income, ARMs, etc… before the last housing bubble. Massive foreclosures which almost killed the US economy. Hopefully, they will not be forced, in the interest of equality, to head down that path again.

http://www.doctorhousingbubble.com/interest-only-loans-california-arms-interest-only-mortgages/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+DrHousingBubble-HowILearnedToLoveSocal+%28Dr.+Housing+Bubble+-+How+I+learned+to+Love+SoCal%29

What do you think?

[D Graber]

D Graber

.
I’m thinking there are a lot of people in the wealthy strata the article addresses who still have no clue what causes bubbles, and what causes them to finally pop — and who would be a lot better off renting with an option to buy, so they can avoid the cold bath in housing value drop. Even a cheap money mortgage doesn’t salve your wounds much when you want or need to sell into a crashed market. Think of that cheap money mortgage as an option that punishes strategic defaulters for years who know nothing of Jackie’s options training.

.

[Hank Baltar]

Hank Baltar

The article almost hides that these sweetheart loans require 25%.

Even if (rather when) there is a bubble pop, the banks are better protected from loss unlike the 0% down (& often 125% of appraised value) “liar” loan days.