Comments on: So Whatever Happened To P.M.I???

By: Jim Round

Jim Round — Sun, 01 Feb 2009 17:01:04 +0000

Subprime loans were the biggest culprit. They allowed 100% financing with adjusting rates after 2 years and no pmi because they weren’t fannie/freddie loans. Has anyone ever located the genius who came up with this loan?

By: DV

DV — Fri, 30 Jan 2009 17:41:26 +0000

I don’t agree, the first lienholder is still protected by the 20% buffer if they ever foreclose. The second lienholder is protected by the larger interest rate and shorter term of the loan. In most markets, even in a default the first lienholder would see most of their money in the case of a default. Where property values have dropped 40% (CA, FL, LVNV) is where you see the problems.

By: bc

bc — Fri, 30 Jan 2009 16:58:08 +0000

I am certainly not a mortgage genius, but when we purchased our first house in 2006 and the opportunity to save $100 or so each month presented itself, we took the second mortgage in lieu of the PMI. We had squeaky clean credit and enough cash to put more than 20% down and avoid the PMI altogether, but we wanted the cash on hand to invest and pay for remodeling, etc, so we financed 95% between 2 loans. Made sense (still does to me).

Was it a bad idea to allow first time buyers all over the nation without a dime in the bank to take 2 loans on an over-priced house with gimmicky rates and not insure it? Yes. Did it make sense for them to offer it to someone with good credit and cash and a decent head on their shoulders like me? Yes.

Is there a program out there that can tell the difference between the two? Apparently not.

And I’m in insurance, so I fully appreciate that everything (seriously, everything) is insurable and should be insured.