08.14.07
Cost of Foreclosures
A good article in American Chronicle reminded me of the closings that changed over from MIP to Piggy-back loans, where a first and second mortgage kept the borrower from having to pay the traditional Mtg. Ins. premium.
The article said “Most loans with higher than 80% loan to value ratios when they were originated had to have mortgage insurance on them if they were bought by institutional federally chartered savings and loans or FDIC insured banks.”
It seemed like a good idea from the borrowers perspective - save a few bucks. But from the Lender’s perspective, they lost their default insurance and will pay a corresponding price in this foreclosure market.
The article also pointed out “For every million dollars in loans being serviced on defaulted loans, many banks are losing about $10,000 a month plus the loss of value as the property market spirals inward on its dwindling integrity and corrupt viruses which have infected the entire industry. That is a serious implosion.”
Another perspective on what the lending industry has done to itself.