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do PRIME neg-am loans exist?

snigletsniglet
edited August 2008 in Housing Bubble
Does anyone know if there such a thing as a negative amortization prime mortgage, or all neg-am offerings either sub-prime or Alt-A? Is it also the case that there is no such thing as a 100% financed prime mortgage?

I am just trying to get an understanding as to whether it is only sub-prime or Alt-A borrowers who might find themselves with little or no equity.

Comments

  • RobroyRobroy
    sniglet wrote:
    Does anyone know if there such a thing as a negative amortization prime mortgage, or all neg-am offerings either sub-prime or Alt-A? Is it also the case that there is no such thing as a 100% financed prime mortgage?

    I am just trying to get an understanding as to whether it is only sub-prime or Alt-A borrowers who might find themselves with little or no equity.
    Um, even if you put 20% down, if your house loses more than 20% of it's value you will have negative equity. It is happening in California a LOT. It will start happening here as we catch up with them.
  • rose-colored-coolaidrose-colored-coolaid
    Robroy wrote:
    sniglet wrote:
    Does anyone know if there such a thing as a negative amortization prime mortgage, or all neg-am offerings either sub-prime or Alt-A? Is it also the case that there is no such thing as a 100% financed prime mortgage?

    I am just trying to get an understanding as to whether it is only sub-prime or Alt-A borrowers who might find themselves with little or no equity.
    Um, even if you put 20% down, if your house loses more than 20% of it's value you will have negative equity. It is happening in California a LOT. It will start happening here as we catch up with them.

    Agreed. The only way we don't see prime loans with little or no equity is if banks entirely stopped issuing prime mortgages in 2006 (well, soon to be 2005). Wasn't it possible to get a prime mortgage with little or no money down? Say 3% or 5%?
  • jillaynejillayne
    Hi Sniglet,

    I believe they do exist. Reason why is that it use to be (ha, ha) very difficult to get a pay option/interest only/negative am ARM loan. A homeowner was required to have a very high "prime" credit score. I'm guessing these would be vintage 2005/2006 and older. 2006 and after, the wholesale lenders started competing with each other very heavily and we saw credit score, underwriting guidelines and downpayment requirements go down drastically.
  • UbersaladUbersalad
    Yes, option arm at one point was available only for strong borrowers. World Savings at one point had a very strong portfolio, and all they did was option arms.
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