Don’t have a down payment? We’ll give you a second mortgage to cover that.

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2008 all over again. I wonder if those will be “forgiven” then sold to debt collectors, and then years later used to confiscate the house for pennies on the dollar like they’ve been doing since Covid.

Prospective home buyers should fully understand the terms of a ‘silent’ second mortgage before taking one on, expert says

Home buyers will be able to buy a home without putting any money down under a new program launched by United Wholesale Mortgage, one of the largest U.S. mortgage lenders.

The Pontiac, Mich.-based company’s new program will be available to first-time home buyers and people earning at or below 80% of an area’s median income, the company said in a press release.

UWM (UWMC) will give eligible buyers a second-lien loan of up to $15,000, in the form of down-payment assistance, for 3% of the home’s purchase price. The loan will not accrue interest or require a monthly payment.

Buyers can also choose when and how often they want to make payments on that second loan, which must be paid in full by the end of the loan term if the first mortgage is paid off or if the borrower refinances the mortgage, UWM said.

“Homeownership is something we’re very passionate about,” Melinda Wilner, chief operating officer at UWM, told MarketWatch.

The company had previously allowed buyers to put down as little as 1% on their homes, but it wanted to go further to help home buyers, she said. The lender is anticipating a higher volume of borrowers with its new zero-down program, Wilner added.

Poor underwriting practices were a key driver of the subprime-mortgage crisis in the U.S., the International Monetary Fund wrote in 2008. But unlike the low- and no-down-payment loans that proliferated during that time – when lenders made loans to people who eventually were unable to pay them and lost their homes – UWM’s program is different, Wilner said.

“It is such a different time now than it was back then,” she said. “Underwriting guidelines are very, very different now than they were in 2006 and 2008 … and last time, we had a whole lot of oversupply of houses. … Now, demand is way heavy, compared to the supply that’s out there.”

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