Mortgage

What ever happened to ‘skin in the game’?

4 ways to reduce defaults without shutting out new buyers
  • By 2010, 31 percent of all mortgage defaults were voluntary 'strategic defaults.'
  • Pre-purchase counseling is a primary reason down payment assistance loans have performed well over time.
  • 64 percent of first-timers purchase a home because they want to own a home of their own.

Seven years ago, the Wall Street maxim, having “skin in the game,” became a popular explanation for the devastation of the America’s system of housing finance. Following the subprime meltdown and the beginning of a wave of foreclosures that would eventually drive more than 9 million families from their homes, desperate policy-makers sought simple explanations like “skin in the game” to explain unprecedented and frightening events. Mortgages that put buyers in homes with no down payments, loan products popular in the go-go boom years, left owners with no equity to protect them from market declines. When their homes’ values tanked after the bust, panicked homeowners realized that they would owe more on their homes than they were worth for years to come. With little invested in their homes, some owners decided the cost of defaulting was less expensive than staying put despite the damage to their credit. By 2010, 31 percent of all mortgage defaults were voluntary “st...