We're seeing more and more seller carrys around here tho it can get tricky w/some investors.

It was last yr at a seminar that the possibility came up that some of the private MI companies may be undercapitalized.

Btw we also are not doing anything over 80% on stateds; business as usual on no doc and full doc.

The biggest reason your stated income has gone south is the fact that Fannie and Freddie aren't buying that paper any longer. No Ratio and No doc were securitized under Alt-A securities and those are still performing fairly well.

Some of this is reactionary and some is fall-out from the GSE scandal of 2005. It will settle out. In the meantime, we are due for a small correction to 100% sub-prime financing and it's a good idea for housing and for homeownership if we pull that back a little. When FHA had a market share of over 12% it was a better balance of less-than-perfect credit. As FHA has slipped to less than 4% it means too many fast and dirty sub-prime deals got written with bad appraisals, shoddy documentation, etc. Too many subprime companies competing for volume and not holding to their own guidelines.

The writing was on the wall so none of this should be a surprise.

But going back to the old "seller-seconds" days? Oh, my that brings back memories.....

Ack as long as we don't go back to those awful AITD and other risky scheme days!

Diva,

Do you remember the days of asking a customer to go to the Moneystore or Beneficial and take out a 5% unsecured loan for their down-payment? Sub-prime old-skool style.

Nope but I do remember many *xperts* comin out of the woodwork w/magical schemes for letting buyers assume non assumables which basically was always some permutation of an AITD w/a convoluted interpretation of the law insisting that it would NOT trigger the due on sale . . .

Let's see, assuming a 7% loan in a market where 10.75% was considered a great rate . . . anyone else remember those days?

For use Real Estate agents that don't know? Would you be kind enough to explain what "AITD" means.

thanks
ron

Oh sorry! I am giving away my age by even talking about this! We haven't seen these in ages: All Inclusive Deed of Trust. Also referred to as a *wrap around* mortgage.

Here in CA virtually all purchases are by way of a deed of trust. The AITD was an attempt to circumvent the non assumability of loans by letting a buyer step in and take over a loan w/o the lender's consent and hoping not to trip the *due on sale* wire.

Typically the seller would take a 2d to cover his/her equity and *wrap* the whole thing into one.

That was back in the day when interest rates were going up by the hour, I recall some friends who were deleriously happy getting a rate lock at 10.75% on a 1st!

So the older loans which were written in the 7% range were attractive to buyers but many were non assumable or could only be assumed by qualifying the new buyer and paying an assumption fee and numerous other hoops b/c the lender had no motivation to let those loans be assumed at the old rates.

The whole AITD thing was a fraud on the lender tho many attorneys made bank coming up w/supposed loopholes.

I haven't seen a wraparound, only read about them. You must be much older than I am :P

Yes this was the same time as the dinosaurs were becoming extinct . . . : P

Wrap-Arounds are pretty popular here in CA in regards to creative financing. Investors here love these Seller-Carry loans but the Due On Sale clause is something that not too many are familiar with.

Good post, Diva!

Are you guys still seeing AITDs in your area? Wow, it's been eons for me. Tho we're seeing more seller carrybacks w/new loans.

I am seeing quite a few and maybe it's because I work with a circle of investors. I rarely run into AITDs when working with a client that isn't an investor. Seller Carrybacks will be even more popular as lending guidelines become tighter.IMHO

You do not have to be ancient to know what the AITD is. It is one of the questions on the California DRE exam.

Don’t forget about the big players eliminating their competition.