Chris Daly

The Next Home Equity Surge

Timothy-you have made some excellent points in your post. After sending my email, I went to the REX website and did a lot more reading especially in the FAQ area. And, you are absolutely correct, this product is geared towards homes [owners] in the range you mentioned, and would be great for homes in lower appreciating areas. I do believe, we will be in a real estate market of 3 - 4% appreciation over the coming years, which could make this attractive for some. If you are going to use the money to purchase high return investments, then this is a good product.

Thanks for your feedback.

The Next Home Equity Surge

This product is basically a reverse mortgage with no age limit requirements. If used properly, it can be a good deal for the homeowner. Then again, its not for everyone and certainly not for every location. Some locations appreciate much faster than others, and makes this a good product for those areas.

My caution, however, is that this product could be an issue for both the borrower and the lender should the property values head significantly lower over the years. Would the lender call the loan due if the combined loan amount (1st mortgage and new Equity loan) is more than the property value?

Where can we get more information on this program?

Subprime Borrowers Causing Upside Surprise: What's Happening Here?

So if the sky is not falling, what the heck happened to New Century (NEW)? Two months ago, they were the leaders in the sub-prime space and now they are in Chapter 11. They wrote too many bad loans and got caught by their investors.

I do, believe, however, that the tightening of underwriting guidelines at the sub-prime, prime and Alt-A levels will further worsen this real estate market. We have not seen the bottom. The issues are much broader than lending. We have inventory growing in many areas, which will place undue pressure on the market.

There will be a lot of class action suites against mortgage lenders, brokers, and bankers over the next couple years. If you have been brokering these loans, you may want to get a good lawyer.

By the way, I am a hard-equity (hard money) lender and see a lot of sub-prime borrowers who will never be able to get loans from any funding sources. For several reasons: poor credit, very low real income, no real assets, and in many case NO EQUITY [ZERO] in their homes. There is nothing we can do to assist these people even for us hard money lenders. The banks will end up taking back these homes. This is simply a bad situation for all involved.