I’m going to try to be cheerful about this, but I’m not. I got invited last week to a very fancy small luncheon with a top Wall Street researcher/analyst -- a household-name firm. The guy (in suspenders) spoke on real estate, mostly commercial, lucid (if general) information. Toward the end of an extensive Q&A, someone asked about housing. “I’m worried. Subprime loans are back. Banks are making 3 percent-down loans again. And what really bugs me: We forgave the misbehavior of borrowers in the Bubble.” DavidPinoPhotography I could not shut up, argued with the host, and stomped back to the office. Then opened my email an find an inquiry from the Inman editorial group asking about an outside posting titled, “Subprime Is Back, It’s 2008 All Over Again.” A willfully misinformed rant by one of those yahoos so commonly trying to scare people. Telling them to buy gold and invest in “12 percent returns from peer-to-peer lending.” The Wall Street...
- The “new” 3 percent-down loans are nothing more than big banks snookering big media into free advertising for an old product easily available everywhere in one form or another.
- It’s dangerous to loan with a small down payment. The antidote is not to deny credit access, but underwrite the bejabbers out of those loans.
- During the Great Recession, we overdid well-intended efforts to keep hopeless households in their homes, even though any given block had vacant foreclosed rentals at a lower cost than the workout.