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Realtor.org: No-doc loans are particularly hard to get, locking out people whose incomes are derived from investments or who are able to tax-shelter significant dollars.
The California Mortgage Bankers Association spokesman Dustin Hobbs says the industry understands that banning most alternative financing isn’t the long-term answer.
“It’s a reaction to the current environment,” he says. “There’s such a lack of appetite for risk right now in general that any product viewed as having any sort of risk at all has a tough hill to climb.”
Chris George, president of CMG Mortgage, predicts that no-docs and other nontraditional loans will be back within the next six months as lenders gain confidence. “As with injuries, as with your credit, as with the economy, time heals all wounds,” he says.
Karl Denninger thinks this is an invitation to bringing back mortgage fraud. That’s certainly a risk, but it’s also true that old-style, 30-year mortgage is something of a tired dinosaur, that makes less and less sense. There are more people working as freelancers, and the idea of having a lifetime job at the big factory in your town is a joke.
To some extent, that just means renting is probably on a long-term secular increase, a point which Richard Florida has been talking about quite a bit. And for the people who do have abnormal careers or income streams, certain much-derided mortgage, such as the pick-a-pay or no-doc will probably come bac, eventually, though six months seems way too optimistic.
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