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Strategies & Market Trends : Waiting for the big Kahuna
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To: Real Man who wrote (80514)7/15/2008 8:30:48 AM
From: saveslivesbyday  Read Replies (1) of 94695
 
Vi, I don't disagree that "creative financing" was a big part of the equation.

However,

back in the good old days (prior to Y2K) the standard requirement was for 20% down,

this was to be sure

1. the homeowner could afford the house - ie have adequate assets
2. protect against significant declines in value, ie homeowner would still have some % equity

Then there's the issue of

3. not giving mortgage when payment was > 35% monthly income, and
4. actually looking at income tax returns to verify income.

All of the above was thrown out the window - a complete free for all.

The artificially low rates affected #3 above, nothing else.
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