{"id":15726,"date":"2011-05-26T11:35:28","date_gmt":"2011-05-26T18:35:28","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=15726"},"modified":"2011-05-26T11:35:28","modified_gmt":"2011-05-26T18:35:28","slug":"would-demand-exist-for-discounted-stricter-mortgages","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2011\/05\/26\/would-demand-exist-for-discounted-stricter-mortgages\/","title":{"rendered":"Would demand exist for discounted stricter mortgages?"},"content":{"rendered":"

I received this interesting suggestion from a reader<\/a> via email a while ago:<\/p>\n

As a reader, I’m curious what the last 5 years worth of foreclosure\/loan modification programs have cost loan originators, and how much of that has been baked into interest rates as a cost of doing business (and\/or would be without nearly-free money).<\/p>\n

As a prospective buyer, I’d love to find someone who would write a pre-2002 mortgage, where I provide a healthy down payment, have to move out if I can’t pay (or can be promptly foreclosed upon), and can’t modify the terms when they no longer suit me. Presumably this would be in a sideline agreement ceding these privileges – it’s not like they’re constitutionally protected. That should make me a relatively attractive counterparty.<\/p>\n

If a lender was willing to hold onto the mortgages they originated, there are some really creative alternative mortgage products just waiting for market entrants – the one above and ETrade’s portable mortgage, off the top of my head. Suspect that these innovations are prevented by the fact that almost all mortgages can be easily sold off – it would be lots more work for not much gain.<\/p><\/blockquote>\n

Interesting ideas. Of course, it seems to me like the pool of possible home buyers that would even be able to qualify for these stricter mortgages is so small that there wouldn’t be much front-end demand for a product like this.<\/p>\n

I don’t have a lot of contact with the banking world, so I couldn’t say whether there might be back-end demand for mortgages like this, but I suspect with as cheap as money from the Fed is today, there’s little to no incentive for banks to even test the waters.<\/p>\n

What do you think? Would you take a mortgage like what’s described above if you could get a significantly discounted rate, or are the tradeoffs not worth it?<\/p>\n","protected":false},"excerpt":{"rendered":"

I received this interesting suggestion from a reader via email a while ago: As a reader, I’m curious what the last 5 years worth of foreclosure\/loan modification programs have cost loan originators, and how much of that has been baked into interest rates as a cost of doing business (and\/or would be without nearly-free money)….<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[206],"tags":[305,7,30],"coauthors":[],"class_list":["post-15726","post","type-post","status-publish","format-standard","hentry","category-features","tag-banks","tag-foreclosures","tag-lending"],"yoast_head":"\nWould demand exist for discounted stricter mortgages? 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