DelphiFAQ Home Search:
General :: Outside the Cube :: Finances
Experiences and advice on personal finance issues. From credit cards over credit scores to mortgages and real estate investing.

Articles:

This list is sorted by recent document popularity (not total page views).
New documents will first appear at the bottom.
Recommended links on this topic:
Featured Article

Bank of America making risky loans?

Question:

I heard BofA is stricter than most other banks when it comes to qualifying mortgage applicants and therefore has (will have???) a lower default rate. What do you think about that?

Answer:

I am not sure that BofA is so very strict as someone tries to make you believe. I will give you 3 examples from my personal experience.
  1. A friend of mine recently got a Home Equity Line of Credit (HELOC) on a single family home. He had bought the single family house in San Jose, CA, for $620k in 2005, it is now (= December 2007) worth around $675k. I come to this number because an investor recently made a low-ball offer of $650k which my friend rejected. I think my friend has a $600k first mortgage on this property.

    In order to give my friend the HELOC, BofA did not do a real appraisal. They just ran some computer appraisal. The computer appraisal spit out $750k. My friend knew this number was inflated. The loan officer knew it was inflated. They took 90% of 750k = $675k and gave him a $75,000 HELOC.

  2. Another indication is that Bank of America still gives HELOCs on rental properties, even if they are out of state. Contrary, Citimortgage does not make HELOCs on rental properties at all any more. This information is as of January 10th, 2008.

  3. As a 3rd indicator, Bank of America still has no problems making stated income loans where the income is inflated, as 'doubled'. $200k annual income for a quality assurance person? This type of job earns about $100k. But if you have a high enough credit score and 20% down payment (may be borrowed from an existing HELOC), then you will get that loan.

Feel free to share stories how Bank of America gave generous loans, or - to prove me wrong -, how they were strict and turned someone down.





Generated 16:01:06 on Oct 19, 2017