re: Lets talk about the housing bubble

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Granted the banks aren't doing the interest only ARM with balloons, but they damn sure are doing $350K+ loans to a combined income of $80K, less than stellar credit score, and very little money down. This crap is still ubiquitous and will put a strain on the bubble eventually.

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I get ya, but lenders are still basing decisions on debt-to-loan ratios and not giving loans to folks above a realistic threshold in relation between income vs debt with the new potential loan this time.

They weren’t doing that before. In fact they were allowing people to have a negative DtL ratio and still qualify. It was nuts.

A certain percentage of defaults are going to happen. The problem before 2008, however, is they were happening at 4-5x the historical deviation rate and then being hidden in tranches sold to federally funded organizations.

You can’t get a loan right now unless your net minus debt is more than 1.5x your loan premium. The only people skirting this are folks who have hidden debt from the lender.