Lending in a downward market.

[Ralph S.]

My question is directed at the lenders here on BP.

I understand we've learned the lessons of liars, high LTV, and ARM loans and have retrenched to a more sane and traditional lending practices, but, with the continued decline in home values, how do you evaluate even an 80% conventional loan on a property, knowing further decline is likely to erase some or all of the equity the buyer brings to the table?

If the liar loans, high LTV and resetting ARMS started the foreclosure avalanche, it is still being fed by resetting ARMS plus rising unemployment rates. If there is another 10-20% of price coming off the top in the future, and unemployment continues to climb, wouldn't a much higher percentage of conventional 80%'s end up in F/C?

Maybe I shouldn't think so much, but how is the flow of F/C's ever going to return to historical levels?
:roll: