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Suburban Renewal wrote:
There are plenty of programs out there.
It's a grant program using a not for profit organization.
I am certified in CA for two different ones.
Here's the one I like better: http://www.marpafunds.org/
Although I am in CA, they do all 50 States.
Chances are the Agent that created the lease paperwork worked on behalf of the Seller.
Bring your paperwork to a Mortgage Professional and have them decipher it for you. It should clearly spell out how much credit you should have.
What is the purchase price? Is it current market value? Who determines that?
Your appraisal or theirs?
I just wrote an article this morning on snags with the Lease Option.
http://www.patagoniafinance.com/2007/07/lease-option-to-buy-snag.html
View my profile if you would like to contact me for more information.
It's not simple. It's flawed. You are expecting the consumer to not act like a normal person. This may be a great loan - but for a very select few. Very select few.
Just like with a Payment Option ARM might be a great loan. We can all run the numbers and determine that if a borrower paid the minimum payment required (Neg Am) and took the difference between that and what they might have had to pay on principal and interest for a regular conforming loan and invested that into the investment of their choice and received an average rate of return they would be miles ahead of the "sucker" paying on a 30 yr fixed.
But there's a fly in the ointment. records indicate that of the owners of these POAs 75% make only the minimum payment, they've run up their credit cards, they've bought new boats, and you can guess that none of them have been investing the difference in anything other than JetSkis and vacations.
Sign the typical borrower up for one of these loans and you are saying they won't be human?
Mark Flanders wrote an article recently,
http://soundbiteblog.com/2007/07/04/equity-acceleration-programs-are-they-better-for-the-borrower-or-the-bank/
While the idea may be great, the human is the flaw in the equation.
Human nature is not something we can change or regulate.
Like Mark said, "The biggest advantage to many Equity Acceleration Programs is to the Lender and the Loan Officer."
How to payoff Mortgage early
It isn't a POA, it's a Glorified HELOC. - And that part is ok. As long as I don't also have buy software on top of it. And I know it's a ARM going into it.
My problem is that you are selling these loans to the same people who you were selling POA's to. While the POA had a great hook (minimum payment), this one has a similar hook (payoff your home fast without changing a thing).
I say "you " as in the general sales force, not specifically you Dave.
So, if this is the same general public that you sold the POA to. And study after study has proven that they as a group cannot show the proper discipline to manage the extra disposable dollars making the minimum payment gave them...
How in the world do you honestly expect them to manage a HELOC, especially when they have equity.
That's my issue.
This is good loan for the right person. But you are not focusing your marketing towards that right person. Instead, this is being sold as the holy grail of loans to everyone.
To make this work like the videos and presentation say, the buyer would have to be a very disciplined individual. You'll agree. You'll also tell me that these people are everywhere. I'll say that may be true in theory but I point to the masses that were sold the POA. The masses who are now facing a recast? The same masses who paid the minimum payment each month. Who bought cars, boats and vacations with the extra money in their pockets.
Weren't they also the disciplined ones?
If they are not, please explain how you are making sure they are different.
I'm not questioning your particular ethics. I don't have a problem with the loan itself. I have a problem with the marketing and selling of this loan.
(I didn't want to get into a conversation about why a person might want NOT to payoff early and the tax deductibility. That's fodder for another topic, and Rhonda already touched on it)
August 01 2007
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