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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: eddieww who wrote (2018)	11/10/2003 8:08:48 PM
From: TimbaBear	Read Replies (1) \| Respond to of 110194

eddieww Do mortgage lenders write the mortgage (assume the homebuyer default risk) before the house is built and homebuyer takes possession? No, not really. There are two loans involved in new construction: The construction loan which is an "interest only" loan which is then "modified" at Certificate of Occupancy (CO) into an amortizing mortgage loan. The construction lender will insist that the buyer's downpayment be spent first, then limits the builder's draws to be only for work (or stages) completed. Thus the construction lender attempts to protect themselves as much as possible from the worst possible outcome of a default. Hope this helps TimbaBear (ex mortgage broker)