Quotes from the Great Recession

Private Lending & Conventional Mortgage Advice
7yFollow

Quotes from the Great Recession

Margie Pierce
Rental Property Investor · Minneapolis, MN · Member since 2017 · 33 posts · 13 votes

I unfortunately didn’t have any money to invest with during and immediately after the great recession.  Therefore I don’t really have any first-hand experience. However I hear people saying things like “ the banks didn’t give out any mortgages in 2009 and 2010!!!” 

Can you folks please speak as to what extent to which the above statement is true?

 I have a line of credit worth around $100,000, abs I would assume that even in dire financial situations 1) my line of credit would still exist albeit pitentially at a higher interest rate and 2) banks would give me a mortgage if I put down 25%. However, maybe I’m wrong? I’m looking for people who actually were obtaining mortgages and using lines of credit in those dark years rather than conjecture. Thanks!

0Reply
11 views

5 Replies

Jump to latestLatest
  • Dan Maciejewski
    Realtor · PInellas County Largo, FL · Member since 2016 · 902 posts · 810 votes
    7y

    The real reason that they weren't giving out any mortgages wasn't because they didn't want to -- believe me, the Loan Originators definitely wanted to!

    One of the reasons was that the criteria became more strict (applicants had to have credit scores and jobs) so less people were qualifying for loans.  And to go with that, many of the people that could have qualified were underwater on previous purchases already.  

    If your line of credit is a HELOC and the appraised value of your home drops, so will the line of credit because the amount of equity will drop. If it's business-based or salary-based, you should still have the line of credit to use.

    And as far as a mortgage,  the banks (mainly) want you to have a W2 job and a good credit score and a good debt to income ratio -- if those remain in place, the home values shouldn't really matter, they should still be issuing mortgages.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    I lived through it .. HELOC"s were called or frozen no matter of valuations..

    lenders removed NON owner occ product from the shelf.. for 2 to 3 years at least for borrowers who were not the top 2% in income in the US> private money HML kept going as a new crop came up.. the older crop had defaults all over the place and many failed along with their borrowers.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Margie Pierce
    OP
    Rental Property Investor · Minneapolis, MN · Member since 2017 · 33 posts · 13 votes
    7y

    Thanks Jay Hinrichs! Now those owner occupied loans could they be used for duplexes triplexs and quads? We’re they offering loans for 5-15% down? 

    0Reply
  • Bruce Runn
    Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes
    7y

    @Margie Pierce

    I can answer as I got mortgages at that time.  The requirements were just much tougher.  

    You had to have 25% down payments with verifiable source of funds, 2 rental ownership experience to get a portion of the rents qualified at 50-75% of value for income on a new property, very high credit score and you had to show how it would cash flow to prove it was profitable, a 40% DTI, and 6 months PITI cash reserves on all properties- so essentially a perfect candidate.

    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    7y

    Bruce and I had the same experience. I only bought 2-3 houses a year 2007-2008, by 2009 and 2010 you could buy as many 25% down rental houses as you wanted. If you had good credit and your wife had a job you could be an unemployed landlord and the only thing stopping you from getting 3-3.5% loans was paperwork.  

    Looks like approved mortgages were cut in half but maybe that’s because sales were cut in half. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free